As this is such an important topic; one that requires great attention and detail, the Report Captions section of this series will be divided into three parts.
Let's begin the report:
Begin each First Report with this sentence:
We received this loss on (fill in the date) and contact was made with the insured on (fill in the date). An inspection and meeting with the insured was held on (fill in the date).
Note, this should always come after the report header and before the first caption and not repeated for subsequent reports.
Enclosures:
List all enclosures you are sending with this report. Photographs, engineering report, letter from an attorney, etc. Do not list your report as an enclosure!
Example of Itemized List of Enclosures:
1. Photographs
2. Conquest Engineering Inc. report
3. Letter of representation from Public Adjuster, Joe Smith
Reserve Recommendations:
Special Note: Current reserves should be documented on EVERY report.
As you know, insurance company reserves are those estimated sums of money that are set aside by an insurance company to cover known and unknown projected and open claim payouts and expenses. There are few functions more important to an insurance company than maintaining a proper balance between reserves and actual payments made on claims. A key measure of the solvency of an insurance company is their posted calendar and accident year loss ratios, which are calculated from earned premiums compared to claims paid in the current calendar year and those still outstanding to be paid through the reserves. Over and under estimating reserves are both problems. We must strive to get the estimated reserve as close and as accurate the first time and adjust it when needed.
List each coverage and be as accurate as possible. If there is coverage for Business Interruption and the insured’s business has suffered a loss of income, list that coverage in the reserve but do not list a value as that is the responsibility of the Business Interruption department. In lieu of a dollar value, insert the verbiage “TBD – separate report to follow”.
If you determine there could be a possible higher exposure at a future date, mention it in your narrative under this caption. If for some reason you need to recommend a change to the reserve inform the company immediately via interim report. Don’t wait until the next report! The reserves you submit are probably the only numbers that will be reviewed by upper management of a client. Every time you review a file, you should always ask yourself, are the reserves still adequate? Has anything materially changed since my last report that may impact my reserves? Is so, this information needs to be communicated to the client. Remember, recommending to raise or lower the reserves are each important to the client along with why the change is being recommended.
If there is a huge swing in reserves, contact the Provencher & Company claim manager immediately! At our end of the business, surprises are rarely a good thing!
An improperly reserved loss reflects incompetence in the eyes of the client and that is all that matters.
Example of Reserve Caption Verbiage:
Building: Loc 1, Bldg 2 $100,000
BPP: Loc 1, Bldg 2 $ 25,000
BI: Loc 1, Bldg 2 TBD – separate report to follow
Our reserves are based on our initial inspection. The building reserve may increase due to possible structural damage to several steel beams. This loss is being inspected by an engineer to determine the condition of the structure. Once the engineer inspects the damage we will adjust the reserves accordingly.
You have now informed the client there may be a large increase in reserves to cover the structural beams that may need replacing. Since you have set the foundation for a potential large reserve increase, the client is not likely to question your adjusting ability.
Abstract of Coverage:
The adjuster is responsible for verifying coverage in place at the time of loss for every claim. All claims will generally require a copy of the Policy Declarations unless otherwise specified. Claim files must demonstrate the adjuster understood the full importance of coverage, including all forms and endorsements, and how the coverage applied to the claim.
The adjuster is responsible for verifying coverage in place at the time of loss for every claim. All claims will generally require a copy of the Policy Declarations unless otherwise specified. Claim files must demonstrate the adjuster understood the full importance of coverage, including all forms and endorsements, and how the coverage applied to the claim.
Example of Abstract of Coverage Caption Verbiage:
Coverage was verified through the Declarations Page provided by your office. Coverage is afforded under Building and Property coverage form CP 0010 (04/02) insuring Item A, and B Building and Business Personal Property under a blanket building and business personal property at location 001 in the amount of $4,340,750. Coverage subject to Cause of Loss form CP 1030(04/02). Coverage is subject to a coinsurance clause of 90%; Replacement Cost Valuation. The policy is subject to a $10,000 deductible.
Coverage Issues:
This is an example of an optional caption you should insert when there are coverage issues that need to be brought to the attention of the client.
This is an example of an optional caption you should insert when there are coverage issues that need to be brought to the attention of the client.
Example of Coverage Issues Caption Verbiage:
At time of our inspection, it was noted the property had been vacant for a period in excess of 60 days. Your policy specifically excludes loss resulting from vandalism when the property has been vacant for more than 60 days.
Risk:
In this caption, tell the client what they insure. If they insure five buildings on the property, make a sub-caption and briefly describe each. Loss Location One, and the address. Describe business at Loss Location One - furniture store, multi-family dwelling etc. Type of construction - pier and beam construction with composition shingle roof. Building use - warehouse, restaurant, age and condition prior to loss.
In this caption, tell the client what they insure. If they insure five buildings on the property, make a sub-caption and briefly describe each. Loss Location One, and the address. Describe business at Loss Location One - furniture store, multi-family dwelling etc. Type of construction - pier and beam construction with composition shingle roof. Building use - warehouse, restaurant, age and condition prior to loss.
Example of Risk Description Caption Verbiage:
At risk is a family owned corporation, engaged in the masonry business. Your insured has been in business at this location for more than 30 years and appears to operate a very efficient and well maintained property. Approximately two years ago, the insured engaged the services of a contractor to replace the composition roof. The building consists of one story masonry block building, in excess of 25 years of age with brick veneer, approved composition roof and has been maintained and was in good condition prior to this loss.
Cause of loss:
What caused the damage? Date, time (if applicable), sequence of events. Be brief, clear and factual.
What caused the damage? Date, time (if applicable), sequence of events. Be brief, clear and factual.
Example of Cause of Loss Caption Verbiage:
On the reported date of loss, 4/10/2010, the area was impacted by back to back severe snow storms causing approximately five feet of snow to accumulate on the roof of the insured building. As a result of the weight of ice and snow, the roof system failed, causing the roof to collapse.
Subrogation:
Subrogation refers to the potential of recovery under the subrogation provision of the policy; in this example, a contribution from joint-tort feasors, fidelity bond recovery, and refund of overpayments could be sited as subrogation possibilities.
When claims involve potential subrogation recovery, the adjuster is responsible for: recognizing subrogation opportunities, investigating matters related to subrogation, and advising the carrier/client accordingly.
Example of Subrogation Caption Verbiage:
The damaged insured building is less than two years old. It is believed the design of the roof did not conform with local building codes, which could have contributed to the collapse of the roof. It is the recommendation of this adjuster that a structural engineer be hired to determine the actual cause of the roof failure.
Salvage:
Any property covered by an insurance policy that is damaged but escapes total destruction by a covered peril is defined as salvage. As a verb, salvage refers to the process of recovering all or part of a claim payment through selling the remaining damaged property.
Example of Salvage Caption Verbiage:
The business personal property contained in the building sustained minimal damage to the packaging. As a result, the undersigned adjuster contacted the file handler at your office and secured the approval to bring in The Salvage Guys, a professional salvor. The salvor is working with the insured to separate damaged from undamaged goods and will submit a complete inventory within the next two weeks. You will be updated on the status of the salvage through our next report.
Report Captions is to be continued next week....
Did you miss the beginning of this series? Find them here:
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