Understanding The Language Of Claims: Decoding An Insurance Adjuster's Statement Of Loss

Reading an insurance adjuster's statement of loss can be intimidating, especially if you've never filed a property claim before. A statement of loss is synonymous with a proof of loss and is prepared by your insurer's claim adjuster. It itemises your damaged goods that need replacement or repair after a disaster involving your business or home. The document will list the estimated cost to replace or repair each item (the replacement cash value, or RCV), the depreciation, which is the money held back until the actual replacement or repair is completed, and the projected actual cash value (ACV), which is the RCV minus the depreciation and the amount you are estimated to receive to cover the damage.

Understand the role of an insurance adjuster

An insurance adjuster, also known as a claims adjuster, is a person who investigates an insurance claim to determine if the insurer should pay for damage or injuries, and if so, how much they should pay. They work for the insurance company paying the claim and are responsible for reviewing what happened and estimating the claims payment.

Adjusters are used for all types of losses, including property damage and bodily injury. They may handle property claims involving damage to structures, and/or liability claims involving personal injuries or third-person property damage. They either work directly for the insurance company or as a freelance adjuster hired by the insurance company to handle specific claims.

The role of an insurance adjuster is to examine claims to assess an insurance company's obligation in certain circumstances. They may verify the legitimacy of claims and determine a just and reasonable settlement sum. They gather any material that supports or weakens a claim, such as statements, pictures, and any other records. They assess if an insurance policy covers particular claims being made and to what extent. They also compile all facts in a report for the insurance company and alert all individuals involved by the claim's determination.

Adjusters are responsible for protecting the interest of the insurance company. Their main focus is to prevent an overpayment or any payment on an exaggerated or otherwise illegitimate claim. They are also responsible for communicating with the insured throughout the claims process on behalf of the insurance company.

Know what to include in your letter to the insurance company

When writing to your insurance company, it is important to include all the necessary information to ensure your claim is processed as efficiently as possible. Here is a list of what to include in your letter:

• Your name and contact information: Include your full name, address, phone number, and email address. This ensures the insurance company can easily contact you if needed.
• Insurance policy number: Reference your unique insurance policy number. This number is essential for the insurance company to identify your specific policy and access the relevant information.
• Details of the incident: Provide a clear and concise description of the incident that led to the loss or damage. Include dates, times, locations, and any other relevant details. It is important to be accurate and consistent with the information you provide.
• Description of injuries or damages: Explain any injuries you sustained or damages to your property as a result of the incident. Be thorough and provide as much detail as possible. For property damage, list all the affected items, including brand names, model numbers, and their conditions before the incident.
• Medical bills and repair estimates: If you have already incurred medical expenses or received repair estimates for damaged items, include these in your letter. Provide copies of the relevant documents and highlight any important details.
• Police report information: If a police report was filed in relation to the incident, include the report number and the name of the police department that responded. This information can help the insurance company access the report and understand the official account of the incident.
• Contact information for involved parties: Provide the names and contact information of any other individuals involved in the incident, including witnesses. This allows the insurance company to gather different perspectives and conduct their investigation more effectively.
• Supporting documentation: Include any relevant documents that support your claim, such as photographs, videos, or repair estimates. Clearly label and reference these documents in your letter.
• Clear and concise language: Use simple and straightforward language in your letter. Avoid industry jargon or complex terminology that may confuse or mislead the reader. Be direct and concise in your explanations.
• Chronological order: Present the information in chronological order, starting with the details of the incident, followed by the resulting damages or injuries, and any actions taken afterward. This helps the insurance company understand the sequence of events and make a more informed assessment.

Remember, the key to an effective letter to your insurance company is providing comprehensive and accurate information. By including these details in your letter, you can help streamline the claims process and increase the likelihood of a positive outcome.

Learn how to assess damage to your property

Assessing damage to your property is a meticulous process with multiple steps. Here are some guidelines to help you through the process:

• Confirm the safety of your property and staff: If there were employees present, ensure their safety and get them to a secure location. If anyone is hurt, contact first responders for assistance.
• Protect your property: Cover any damage to roofs, walls, doors, and windows with plastic sheeting or plywood to prevent further damage. Make temporary repairs if necessary.
• Document the damage: Take photos and videos of the damage to your property. If you have security footage that shows how the damage occurred, back it up and make it available to your insurer.
• Separate damaged and undamaged property: Be very detailed when reporting damaged and remaining inventory and equipment. Know the quantities and value of your property.
• Create a claim file: Log everything you possibly can. Include expenses incurred while cleaning up and securing your property, as well as wages and hours spent on the process. Keep all receipts, wages, and costs for repairs or restoration work.
• Contact your insurer: Notify your insurer that your property has incurred damages. They will guide you on the next steps, which may include obtaining a police report.
• Wait for the insurance adjuster: The insurance adjuster will visit your property to assess the damage. They will create a statement of loss or proof of loss, which itemizes the damaged goods that need replacement or repair.
• Review the statement of loss: This document will include the estimated cost to replace or repair each item, the depreciation, and the projected actual cash value (ACV).
• Provide repair or replacement estimates: Gather all repair or replacement estimates and submit them to your insurer. The actual repair costs may differ from the statement of loss, and insurance companies will hold off on awarding the check until the actual repair estimations are included.

Remember, it is essential to act promptly and provide detailed documentation when dealing with property damage and insurance claims.

Understand the payment process

Understanding the payment process is a crucial aspect of dealing with an insurance adjuster's statement of loss. Here's a detailed breakdown of what you need to know:

Initial Payment and Settlement Offer

The first check you receive from your insurance company is typically an advance payment, not the final settlement. When an adjuster assesses the damage to your property, they will offer you an initial sum for repairs, which is based on the terms and limits of your policy. You can accept this on-the-spot settlement offer, but make sure you understand its scope. Be cautious of initial offers that are presented as full settlements, releasing the insurance company from further liability.

Multiple Checks and Categories of Damage

In most cases, you will receive multiple checks from your insurance company. When both the structure of your home and your personal belongings are damaged, you will generally get two separate checks, each addressing a specific category of damage. This separation ensures that repairs to your home and replacement or repair of your belongings are appropriately covered.

Mortgage Lender Involvement

If your home is mortgaged, the check for repairs will usually be made out to both you and your mortgage lender. Lenders typically require this arrangement to protect their financial interest in the property. The lender will need to endorse the check, and they often put the money in an escrow account. As the repairs progress, the lender will release funds accordingly. It's important to communicate with your mortgage lender and share the contractor's bid and the amount needed to initiate the repairs.

Additional Living Expenses (ALE)

If your home becomes uninhabitable due to the damage, you will receive a separate check for additional living expenses (ALE). This covers costs such as hotel stays, car rentals, meals, and other expenses incurred while your home is being repaired. Ensure that the ALE check is made out to you alone, as it is separate from the repairs to your home.

Calculation of Personal Belongings

The value of your damaged personal belongings will initially be calculated based on their actual cash value (ACV). This takes into account depreciation, considering the age and condition of the items. If you have a replacement cost policy, you will need to replace the items before receiving reimbursement for their full replacement cost. Submit receipts as proof of purchase, and your insurance company will then pay the difference between the initial cash value and the full replacement cost.

Timely Replacement and Reopening Claims

Most insurance companies will give you a timeframe, often several months, to replace your damaged items. If you don't replace them, you will likely be paid the actual cash value or depreciated value of the items. Additionally, if you discover further damage after accepting the initial settlement, you can usually "reopen" the claim and file for an additional amount. Claims typically need to be filed within a year from the date of the disaster, but check with your state insurance department for specific regulations.

Know your rights

• You are not obligated to give a statement to the other driver's insurance company. Politely decline and, if they persist, enlist the help of a car accident attorney.
• You do not have to give a recorded statement to your insurance company or the other driver's insurance company. However, your insurance policy is a contract, and you may have agreed to cooperate with their investigation. Check your policy for a cooperation clause.
• If you give a recorded statement, prepare an outline beforehand. Once you give a statement, you cannot undo it, revise it, or take it back.
• If you are injured, it is highly recommended that you have an attorney present during a recorded statement.
• If you are worried about the accuracy of the insurance adjuster's itemization, you can hire a public adjuster to advocate on your behalf and make sure that your statement of loss is accurate.
• If you make any fraudulent claims about property damage, you may forfeit all rights to your claim.
• You have the right to privacy. When providing notice to your insurance company, you do not have to make any statements on the details of what happened in your accident.
• You have the right to fair treatment under the Unfair Practices Act and the Fair Claims Settlement Practices Regulations.

Frequently asked questions