Duties of the Adjuster
Investigating and Adjusting a Third Party Liability Claim
Every policy of third party liability insurance requires, as a condition precedent,[1] that the insured give prompt notice to the insurer and cooperate with the investigation of the loss and the defense the insurer promised to provide. The insured is also required to cooperate in the investigation of the insured, assist in the defense of any litigation brought against the insured, assisting in the preparation of answers to interrogatories, requests for admission, sworn declarations and attending and testifying at deposition and trial.
Duties of the Adjuster
When a claim is made, the insurer provides an adjuster to help the insured understand the policy and comply with its conditions.
The role of the liability adjuster is slightly different to that of the property adjuster. Like the property adjuster, the liability adjuster represents the insurer and deals directly with the insured. But these responsibilities play out in a distinct way for the liability adjuster, who has a threefold duty:
to the insured, to protect him or her against exposure to liability to third parties as a result of an accidental tort that falls within the definition of “occurrence”;
to the claimant, to treat him or her fairly and, if liability exists, to resolve the claim promptly without ignoring the duty to the insured; and
to the insurer, before agreeing to resolve a claim, to establish that coverage exists for the loss under the terms and conditions of the policy, that the insured is liable to the third party, and the most reasonable resolution of the claim has been achieved.
The liability adjuster works with the insured to provide the best possible defense to the claim presented against the insured by a third party. The adjuster must understand the meaning of complex contracts (not just insurance contracts) and the rules for interpreting them and be able to explain them in language that a lay insured will understand.
He or she must also be knowledgeable about the law of torts in order to:
evaluate the exposure faced by the insured as a result of the loss;
evaluate the abilities of various defense counsel best suited to defend the insured if sued;
retain an insurance tort lawyer on behalf of the insured and the insurer the adjuster is confident is capable of defending the insured;
control as much as possible the work and expenses of tort defense counsel by conducting investigation requested by counsel and assisting counsel in preparing the defense; and
negotiate and conclude claims presented by third parties with or without the need to involve counsel.
This article was adapted from my book Zalma on Insurance Claims Part 103 Third Edition Available as a paperback and Available as a Kindle Book