...and an award of extra-contractual damages. Although it may not be widespread, and some adjusters may dispute it, some insurers seemingly are taking what can be described as a “positive claims attitude” toward policy interpretation, that is, to focus on looking for ways to cover a claim rather than for ways to exclude it. Because of the nature of the insurance product — that is, its characterization as an unfulfilled promise by the insurer, unless or until a covered loss occurs — insurance companies are highly regulated. State insurance regulators monitor the solvency of insurers to ensure that the protection insureds have paid for will be available if and when they sustain a loss. Regulators also respond to consumer complaints and approve rates and policy forms, among other things.
Adjusters are responsible for interpreting rather complex policy language that ordinarily has a legal as well as a commonsense meaning. This responsibility exists in an environment that is characterized by extensive competition in which customer service and good faith relationships with insureds are vital to a company’s success. It is in the best interest of insurers to consider the interests of the insured as equal to their own. To do otherwise, is to invite claims of bad faith and to face exposure to extra-contractual damages.
Robert Prahl has more than 30 years of experience in the insurance business, primarily in claims and claims training. He began his career as an adjuster in the New York metropolitan area and eventually became a claims manager and claims training director. He has written extensively on insurance issues, having authored two text books for the Insurance Institute of America and previously served as a columnist for Rough Notes magazine, an insurance trade publication.
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Ronald A. Cuccaro, SPPA
Sheila E. Salvatore
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