State Farm has a First Party Coverage Seminar which sets forth the claims handling standards that are fairly standard throughout the insurance industry. The instructor’s manual to this seminar should be studied by insurance coverage counsel. It sets forth very explicit claims adjustment standards and even explains the purpose for many of them. I will be going over these claims standards because they are extremely important in understanding how an adjuster is supposed to go about handling a first party insurance claim.
The instructor’s manual follows up on the documents posted in State Farm Agrees With Chip Merlin Regarding Claims Handling Obligations:
Our Commitment to Our Policyholders
It is the responsibility of the State Farm claim staff to implement Company philosophy with respect to claim handling. Our commitment to our policyholders is to treat them like a good neighbor. We should:
- Listen, be fair, be open, and carry out our part of the bargain under the contract in good faith.
- Be familiar and in compliance with those laws and regulations that impact claims in the appropriate state, and treat policyholders consistent with the requirements of the law.
- Explain all relevant coverages under the policy. Encourage policyholders to report all losses and avail themselves of all benefits under their coverages.
- Diligently investigate the facts to determine if a claim is valid, reasonably evaluate the claim and act promptly in resolving the claim. If it is necessary to reject a claim for coverage or damages, it should be done promptly and courteously, with an explanation for the decision.
- Make an objective evaluation of the facts and circumstances supporting our policyholders’ claims. Doing so helps ensure our policyholders obtain all benefits available provided by the insurance policy.
- Give insureds a reasonable opportunity to comply with their responsibilities under the policy. If a claim is rejected, be willing to listen to subsequent input from the insured. Complete any necessary follow up in a timely fashion, giving due consideration to any additional findings.
- Communicate with and be responsive to inquiries from insureds and their attorneys by promptly answering letters and phone calls.
The post from yesterday resulted in a number of private emails to me suggesting that I was wrong. I did not write that State Farm is adhering to these standards– I merely indicated that State Farm should be given credit for recognizing these insurance claim handling standards and for teaching them. As I indicated in Failure to Have Specific Written Claims Standards is Bad Faith, these written claims standards are required to be made and implemented.
I will be exploring each of these obligations in greater detail this week.