Proving an Insured Loss: Policyholders Need Experts Too


1. “$________ on reasonable fees payable for producing and certifying particulars or details of the insured’s business required by the insurer in order to arrive at the loss payable under this policy in the event of a claim.”


This endorsement is obviously subject to a limit of insurance, which would be purchased at a level commensurate with the risk involved. There is no reference to a premium charge, and it is open-ended as to the types of services that are covered. Obviously the term “reasonable” may prove troublesome in the execution of any claim.

2. “In consideration of an additional premium included, coverage under this policy is extended to cover any cost of inventory, appraisement, adjustment and preparation of loss data, not to exceed $________, in connection with any claim covered under this policy.

It is understood and agreed that the insurance granted under this endorsement is intended to cover any and all costs as mentioned above which the insured deems necessary in the event of a loss, and it is further understood and agreed that the insurance under this endorsement is not subject to the average (coinsurance) clause, if any, contained elsewhere in this policy.”


Like Example 1, this endorsement also limits the amount of coverage for fees, but it calls for an additional premium The intentional exclusion of coverage for public adjuster’s fees prevents the insured from recovering a claim cost which may be required in a complex loss situation. to be paid. Ostensibly, it places no limits on whomay supply the services. The actual cost of the additional coverage as well as the limit of insurance are important factors to consider.

Several insurance companies use more complex endorsements to extend coverage for loss adjusting expenses. While the items in the formmay vary to some extent, the following example is representative of some of the more complex endorsements.

3. “Cost of Inventory, Appraisal and Adjustment.
  • A. Coverage: In the event of a loss or claim to real or personal property, earnings and/or other property coverages included in this policy, this policy shall reimburse the insured for the following expenses incurred as the result of said loss or claim:
    • 1. Any and all expenses incurred for the preparation of records or evidence to substantiate the amount of loss claimed. The insured shall be reimbursed for the expense of furnishing a complete inventory of destroyed, damaged or undamaged property, showing in detail, quantities, cost and providing the actual cash value.
    • 2. In the event an appraisal is called for as set forth in the [standard policy, policy form, item X, etc.], this company shall reimburse the insured for the cost of the appraiser, the shared expenses of the appraiser, and the umpire.
    • 3. Any expenses or fees, not to exceed 10 percent of the adjusted loss or claim, that are incurred by the insured as a result of the adjustment of the loss or claim. Coverage provided here in is not subject to any coinsurance or average clause which may be attached to this policy, but is subject to the limit of liability as set forth in [area where this information could be found in the policy would be stated].
  • B. Special Exclusions — Excluded or Uncovered Expenses:
    • 1. Any and all expenses for taking inventory or preparation of any appraisal prior to any loss.
    • 2. Attorney or legal fees, including court costs.”


This endorsement provides broad coverage for loss adjustment expense, but limits the amount of insurance directly to 10 percent of the loss, however, not as an...