Employ Good Faith Claims Handling Practices
There are a number of basic claims handling practices that communicate good faith on the part of the insurance company. In addition, an adjuster should be familiar with claims handling regulations and any special time requirements in the state whose law applies to the loss.
Maintain an open mind while the investigation is pending. Do not start the investigation knowing what the result will be. Investigate the claim in a light favorable to the insured. Consider all possibilities and remember that both the preponderance of case law and juries will construe most “ties” in favor of the insured.
Prepare every written communication with the expectation that it may someday be viewed by a judge or jury. Do not presume that your claim file is privileged or confidential, even if you have labeled it as such. Privilege and confidentiality are legal determinations that are not your decision. Assume that your file will be read by others. Also assume that any embarrassing language will be seen on a very large screen by a curious and sometimes hostile jury. Accordingly, take care to document “good faith” in every written communication you prepare in relation to a file.
Always treat the claimant with courtesy and respect. Aside from basic customer service issues, your good faith and respectful treatment of the plaintiff will be good evidence against any later claim of bad faith claims handling. On the other hand, any treatment of the claimant that appears to be bullying could be viewed harshly in a later bad faith claim.
Promptly respond in writing to letters or calls from the insured or the insured’s representative. While it is important to respond promptly to telephone messages, a follow-up letter explaining the company’s position should always be sent.
View every letter and written communication as an opportunity to demonstrate your good faith and reasonable investigation. Your letters should be clear and always move the investigation process along. Be proactive. Keep the insured advised of all developments and remind him that the company is doing all it can to move the claim along and reach a determination as quickly as possible.
Provide the claimant, in a timely manner, a blank proof of loss form that complies with state law. Do not unreasonably insist on several rounds of proofs of loss if the information necessary to evaluate the claim fairly has been provided.
Grant the claimant’s reasonable requests for extensions of time in which to file proofs of loss, find replacement items, submit requested documents, or submit to examinations under oath. The goal is to be reasonable at all times. When the spotlight is on your actions and someone asks, “Who did that?” you want to be able to confidently raise your hand and say, “I did and let me tell you why.” Granting requests for extensions provides another opportunity to document the insurance company’s continuing good faith. Be sure to document that, while the company is pleased to accommodate the request for extension, the company does want to move the claim along as quickly as possible, and that the delay necessitated by the extension should never be unfairly claimed by the insured as a delay for which the insurance company should be responsible.