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4 professional liability risks insurance claims adjusters face

On Behalf of | Jan 18, 2024 | Insurance Defense

In the complex world of insurance, claims adjusters are an important part of evaluating and settling claims.

However, their responsibilities come with potential risks. One significant concern is the possibility of facing professional liability lawsuits.

1. Inadequate investigation and assessment

Claims adjusters have the task of investigating and assessing insurance claims. When they fail to conduct a thorough and accurate investigation, it can lead to an undervaluation or denial of a legitimate claim. Inadequate assessment can result in financial loss for the policyholder, potentially prompting them to file a professional liability lawsuit.

2. Misinterpretation of policy terms

Insurance policies are intricate documents filled with legal jargon. Misinterpreting the terms and conditions of a policy can be a costly mistake for a claims adjuster. If a policyholder receives a denied claim based on an incorrect understanding of the policy, it may give rise to allegations of professional negligence and trigger a lawsuit.

3. Lack of communication

Effective communication is fundamental in the insurance industry. Claims adjusters need to communicate clearly with policyholders, claimants and other involved parties. Failure to do so can lead to misunderstandings, delays and frustration. In some cases, disgruntled parties may perceive the lack of communication as negligence and pursue legal action.

4. Bias and conflict of interest

Maintaining objectivity is necessary for claims adjusters, as they must assess claims impartially. If an adjuster demonstrates bias or a conflict of interest during the claims process, it can undermine the integrity of their decision. Such allegations can be grounds for a professional liability lawsuit.

In 2020, the U.S. had 287,150 claims adjusters, investigators and examiners, all of whom played an important role in insurance claims. Unfortunately, they also face potential pitfalls and challenges. Recognizing and addressing them can contribute to a more successful and risk-aware claims adjustment process.