The Art of Adjusting® Podcast

Episode #85: Negligence Is A Mistake; Bad Faith Is A Pattern

• William Auten & Chantal Roberts • Season 3 • Episode 85

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Want a practical blueprint to avoid bad faith and close cleaner files? We dig into the real-world habits that separate defensible claims work from patterns that draw regulator heat and lawsuits. Starting with a crisp definition—negligence is a mistake; bad faith is a repeated choice—we map how state rules, NAIC Model Acts, and administrative codes shape your everyday decisions on property, auto, liability, and workers’ compensation files.

We share the seven claims handling standards that keep you on track: prompt preliminary handling, documented procedures and training, tailored investigations, plain-English communication, visible momentum, rigorous analysis, and clear decisions. You’ll hear why Model Act 902 matters for property and casualty, how anti‑steering rules interact with preferred vendors and OEM parts, and where agents and underwriters can trip administrative rules that later fuel bad faith allegations. We compare states that adopt NAIC models with outliers like Oklahoma, where statute and DOI codes demand files be detailed enough to reconstruct events and reasoning—not just pasted emails, but the policy citations and logic behind each move.

Expect hard-nosed guidance on management oversight that actually shows up in the file, not retroactive notes. We talk through coverage-versus-liability conversations in simple terms, when to pick up the phone before you send a formal letter, and how to use AI cautiously for routine updates without outsourcing judgment. When a scope dispute pops up—say, painting versus hand staining—we show how to tie decisions to policy language and reasonableness, and when to bring in subject matter experts early to avoid guessing. The bottom line: you have the right to be wrong, but only if your documentation proves you acted honestly, timely, and based on sound information.

If you’re an adjuster, manager, agent, or claims leader, this is a clear, usable playbook for unfair claims settlement practices, anti‑steering compliance, documentation standards, and training culture that stands up in court. Subscribe, share with your team, and leave a review with the one habit you’ll change in your next file.

For more insights, you might consider a career in liability adjusting or if you're searching for reliable adjusting services, visit Auten Claims Management.

To explore more about Chantal Roberts and her contributions to the industry, visit CMR Consulting.

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William Auten:

Hello, I'm Bill Auten of Auten Claims Management.

Chantal Roberts:

I'm Chantal Roberts of CMR Consulting, and welcome to the Art of Adjusting Podcast.

William Auten:

Today we're going to talk about life as an insurance adjuster from the perspective of property, auto, liability, or workers' compensation adjusters. Our goal is to bring interesting topics in the world of claims adjusting to people who are working as an adjuster now and to people who are considering a career as a claims adjuster.

Chantal Roberts:

Hi, Bill. How are you?

William Auten:

Good. How are you?

Chantal Roberts:

Very well. Happy New Year.

William Auten:

Happy New Year. 2026 already.

Chantal Roberts:

I can't believe it. I know. It's difficult for me to like little wrap my mind around that. And I say that every year, but then there you go. That's what we have.

William Auten:

And New Year's gets here faster and faster every year.

Chantal Roberts:

Right. I don't know why that is. Speaking of getting here faster and faster every year, it's like we keep doing these things. Like, didn't we just do this yesterday kind of deal?

William Auten:

And the unfair claim settlement practices.

Chantal Roberts:

Yes. And actually we kind we kind of did. Uh it was episode 76 with Heather. It was really late in the season for 2025 because you know me. I I love a good theme. And usually on New Year's, I want to set that resolution of let's do a great job and put Chantal out of the expert witness career kind of kind of deal. Uh by the way, be sure to like, subscribe, share, comment, all of this sort of thing, so that we could get more people listening. And uh, you know, if more people listen, then I'm out of a job that much quicker.

William Auten:

So we want to spread spread the learning.

Chantal Roberts:

Yes, spread the learning, absolutely. So the reason why we do this every year, besides me being a little snarky saying I want to put myself out of out of business, is because these are the things that will get you in trouble. And if you, of course, don't do the things that will get you in trouble, you don't get a lawsuit and your claims don't stay open that much longer. The the claims will settle easier if you just take Bill and my advice and uh go from there. And that is one of the reasons why we do this every year.

William Auten:

It's it's kind of like a uh cascading effect. You want to you want to avoid doing this on one claim to avoid that one lawsuit, but you want to avoid it as a pattern because that pattern is going to be pointed to in the in any bad faith lawsuit. They're gonna say, look, you guys do this over and over and over. You do the same thing all the time. You've got this pattern where you are continuously breaking these rules and you're doing it just to save money, and that's bad faith.

Chantal Roberts:

Yes, yes, absolutely. And and we're going to be talking about that. And of course, you know, I've actually learned a couple of things. I went down to Dallas to talk in their insurance day I day, the CPCU I Day. And I actually learned a little bit of the history behind the Unfair Claims uh Settlement Practice Act, which I did not know. And it had always confused me. And so now that I I know it, I want to share this with everybody because I know we just don't have just a few listeners. We do actually have more than 10, but they're all over the United States. And I also want to always point out that bad faith isn't always a claims issue. Because as soon as we start talking about, quote, bad faith end quote, we automatically, I feel that insurance professionals automatically go, oh, this is a claims deal, and I'm an agent or I'm a broker or I'm an underwriter and I don't need to be paying attention to that. But I learned some of the triggers that agents can trip or that underwriters can trip. And that goes to the administrative rules of the Department of Insurance. So we're going to talk about some of that too, which we've never done. So this is kind of new in our new year.

William Auten:

Right on.

Chantal Roberts:

Yay! So you know me. Uh I love me a good definition to start off so that we always know where we're coming from. And I think that that's like the key point. So again, just kind of reframing this issue is that negligence is a mistake, it is a mistake, or a mistake is not bad, basically. So if you've just neglected to do something once, as a claims adjuster, by the way, uh, that's not bad faith. Okay. Uh bad faith is a choice, just like you were saying, Bill, you just do it over and over and over again. Like you consistently don't send out those 30-day letters, or you consistently lowball, or you consistently don't communicate, or you consistently deny a claim without sending a letter of declination or declination of coverage, however you want to call it. Um, you know, that sort of thing. And that's when we get into our bad faith. Uh, and so who decides?

William Auten:

Who decides whether it's negligence or bad faith?

Chantal Roberts:

Yes. Yeah.

William Auten:

Do you know the the well in New York? Because I'm putting you on the stand in the court.

Chantal Roberts:

Yeah, yes. So raise your right hand, Bill, and say I solemnly swear. Um, no, yeah, you're absolutely right. It it is gonna be in the court systems. It's that quote, reasonable person standard or the judge that's gonna be doing it, right? And and so it's the trier of fact. So I used to, I remember very distinctly when I was a baby adjuster being told uh by the plaintiff attorney screaming at me over the phone, oh, this is bad faith. I'm gonna sue you. And of course, it's frightening. But now that I've been doing it for 25, some odd years, eh, I know, oh, yeah, bless you. You're just trying to intimidate me. Uh it's really the trier of fact. Now you need to know your judicial health holes and and that sort of thing, but there you go.

William Auten:

So Yeah, when I was a baby adjuster, I always had a problem with my pacifier when I took a statement.

Chantal Roberts:

Did you mumble a lot?

William Auten:

I did pull it out and find a place to put it.

Chantal Roberts:

Did you cry? Couldn't do it in the afternoons because that was your nap time. Listen, let me tell you, nap times uh are are nice. I gotta I gotta I gotta tell you. So, so yeah, so who who determines these things is the judge or the jury. And almost every state has the either the unfair trade practices act and or, well, actually, I think they would have both, um, or and the unfair claims settlement practices act. And if you don't have the unfair trade or the unfair claims settlement practices act, specifically for claims, then everything falls under trade practices. And this is where I used to get confused. So this is the educational part of this that Chantal learned when she was doing her research for Dallas. And so originally what everybody had done, like the National Association for Insurance Commissioners had done was had written out the Unfair Trade Practices Act. And it mentions in one or two sections, uh, like maybe line 15 or 16 or something. Don't quote me on that, I'm making that up. You know, don't do bad claim things.

William Auten:

Sure, you know, behave and and be nice to your policy holders.

Chantal Roberts:

Exactly. You know, it was like way general, and a lot of it had to do with selling insurance. Uh and it was a lot like we respond back to the insured and blah, blah, blah. And this is where the agents uh can get tripped up in some bad faith claims in in that particular instance, like not responding to your policy holder when it is reasonably expected that you should respond, quote unquote. That sort of thing. Not that I think most agents don't because they're they're getting their uh commissions, so that's a whole different thing than what adjusters usually do. We we're paid by the hour salaried or whatever, so what I mean, we don't want to ignore people, but I think agents or brokers or producers really, really don't want to do it. Anywho, anywho.

William Auten:

Well, uh agents, you know, bad faith applies to many different industries, not just insurance and not just claims, not just insurance as a whole, like underwriting, but also other businesses. So if you've uh if you're um if you have a landlord-tenant situation, uh, you know, there's opportunities for either or both of them to conduct themselves in bad faith as well. And that's just being dishonest about things, uh, taking unfair advantage of people, um, all those things. So when you think about bad faith, just being uh someone who's really misbehaving to their own benefit, uh that's kind of what it is. And then when you extrapolate that down, or or distill it down rather to the claims operations, um uh when you're a claims professional, you can really see how there could be opportunities for people to act badly on the claims side of things. And that there are you know ample opportunities for people on both sides to act in bad faith here, uh, insured policyholders as well. But um, let's face it, the insurance companies are the one writing the policy, uh, contract of adhesion, you know, so they're the ones that are gonna have the burden, uh the greater burden of avoiding bad faith scenarios. Um and you had laid out the history here. Uh uh as far as the unfair trade practices laws in the 70s, that was um kind of a broad approach. Uh again, that's why I bring up the fact that uh bad faith can happen in other industries. And I think back in the 70s, they were just kind of getting their brains around how to apply this to our industry. And then uh, so then the NA NAIC model act, what what can you tell me about that?

Chantal Roberts:

Okay, so that one is one of the ones that we as claims adjusters are more familiar with. That was passed in the 90s, I believe. And if you ever Google it or whatever and pull it up from the National Association of Insurance Commissioners in AI NAIC, it'll say Act 900. And then there's also uh Act 902. We'll get to that in just a second. And again, all of these very much confused me because I believe the unfair trade practice is Act 800. I was like, what in the world? I mean, because they really do have some of the same languages. Anywho, the claims people felt that we're special, as we are, as we are, and we said we need to have basically our own rules, like these are our own rules, and it's it's not enough to just say act properly in the in the um execution of your job as a claims adjuster. We we need to get more specific, exactly, and I think this is where we came up with about 10 or so, 11, 12, somewhere around there. You know, that is the uh failure to communicate timely, uh explaining insurance coverages, and uh failure to uh pay a claim timely, or failure, or when you deny a claim and you don't quote the policy language. I mean, these are all of the things that we've heard before. Well, then what happened, as is always the case, is that health insurers booger everything up. I'm just gonna say it. Health insurers booger everything up. And so then we said, okay, we want our very own rules, the property and casualty side of it. And so we made the Model Act 902, and several states have adopted 902. Several states have not. Some of them are still going with 900. Uh, some of them go with 902. Arkansas happens to be one of the ones that go with 902, which specifically talks about property and casualty. And that was done in 97. And this is where you will see uh about three or four more lines added, and that's where they start talking about the anti-steering issues, uh, automobile issues, whereas Act 900 didn't have any of that.

William Auten:

So and by steering, that that has to do with collision shops and and and things like that. Yes, uh, insurance companies directing people to go to shops of their choice rather than uh where the policyholder might want to take it themselves.

Chantal Roberts:

Yes. So fun fact also, little fun fact, is that again, uh the industry is changing. And I have my issues with preferred vendors, but that's neither here nor there. We still have all of these anti-steering, meaning the insurer, the carrier can't steer or direct a policy holder to a repair facility, either in homeowners or in auto. However, I have seen the uh policy provision where it says for a reduced premium, you agree to take our repair people.

William Auten:

Right. Which sounds a lot like you're steering them somewhere.

Chantal Roberts:

It does sound a lot like you're steering them somewhere, but I think they get not okay. Let me reword this before I even say it. I think they are allowed to do this because it is a contract between the insured and the uh carrier, and presumably the insured would know that they're signing on for this.

William Auten:

Right.

Chantal Roberts:

Also, I have also seen it where for reduced premium you go with our vendors, but remember you have the choice of vendors. So if you don't want this, you need to tell us.

William Auten:

And yeah, that doesn't sit quite right with me. Um if you're offering a discount in premium, so that yeah, like the big issue is gonna be um OEM parts or not. I mean, that's probably the biggest issue that you're gonna run into when you're comparing uh collision shop that the insurance company is recommending versus somebody else. And um what you're what you're kind of doing is bribing the insured into the use of you know what some people consider substandard parts.

Chantal Roberts:

So um I don't have any skin in that game because we don't handle those claims here, but I did an article for Bankrate about preferred vendors and bluntly stated my belief because I could do that at Bankrate. And which is that I don't particularly care for them because I can do it at on the podcast too, because whatever the policy says is what goes. I mean, if that's what the policy says, then that's what you gotta do. So don't quote me like all you other attorneys trying to like retain me and go, gotcha, because that's what you said on your podcast, blah blah blah. No. Anywho, uh what we're what we're talking in this particular instance is that we can go in there and have these vendors and the history of it is just like the health carriers, where they have preferred doctors, that's how the the property and casualty insurers got the idea. Oh, well, if we can have pref if they can have preferred doctors that someone can go to and we pay them a lower rate, then we can have preferred shops. That's how that all started with the preferred shops. Interesting. Yeah, yeah. So there you go.

William Auten:

Anyway, well, the preferred contractors have have similar problems. I recall, I don't remember the case specifically, but the trial was on YouTube. So I watched it. And um it was a uh carrier that assigned um a contractor, so it was like a preferred preferred vendor thing. Um and it just got way out of hand. They it was the claim was the the claim and the repairs were so badly mismanaged by both the carrier and this contractor that um and it wasn't a bad faith case. I think what it was is I think it was around mold coverage. And and uh the delays in in the contractor's you know performance are really what caused the the problems to arise. Uh anyway, my theory is if you're in the business of insurance, stay in your lane. You're not a collision shop, you're not a contractor, don't try and fix houses, don't try and fix cars. Your job is to indemnify for those damages. And if you're going to find ways to cheap out on it so that you can save money, I think that's a little shady. And if you're gonna bribe your policy holders by giving them a discount, I think that's pretty shady too. That's my opinion.

Chantal Roberts:

I I this is one of the ones where you and I agree. We actually agree. And and in this particular instance, I know what the carriers are doing. You know, they're trying to control that loss adjustment expenses, and we're getting way off topic, so we got to go back. However, however, it it it does tangentially apply to our bad faith talk. And that is adjusters, be aware of what's going on in your state. If you have anti-steering rules, what your policy says. I always found it difficult being an adjuster when I handled auto claims, because invariably the insured would say, I don't know where to take my car to get it fixed. Where do you suggest? And I would always, if if I absolutely positively could not use. Get out of it. Like my feet were being held to the flame. I would give them three choices. And you have to pick. It's your car. But here are three choices. I'm not saying that. And of course, I documented the claim file saying I did not recommend anything. I gave them the three choices. So anyway, okay. So we're talking about handling claims under these unfair and deceptive. And I can see why it would be considered that way. Because I I've seen a couple of bad faith claims come through where the initial remediator, according to the policy holders' belief, has quote messed up and quote the the property because they didn't do their work right. And and so, however, on the flip side, I do think there's a call for sending a remediator out immediately. Okay, we're off topic. Okay, so anywho, hey, we're going, we're moving on. This is this is like a whole nother topic, a whole nother podcast topic. Okay.

William Auten:

Yeah, because well, yeah, and and because you get go down the rabbit hole of deceptive contractors, deceptive public adjusters, and attorneys and lawsuits against insurance companies, and that's gonna be that'll be a whole other podcast.

Chantal Roberts:

So yes, whole nother podcast. Okay, so claims handling rules can live under the Unfair and Deceptive Practices Act. Uh you know, we do have our state because states are the ones who contract with or who control insurance. So each state is going to be different. And I don't know if I did mention, by the way, those states that don't follow any of the model acts. Uh some of them are like Wash Washington, D.C., uh uh Iowa, because Iowa's weird. I mean, I can say that I'm married to an Iowan, um, Nevada, Oklahoma, and Alabama. Uh oh, Mississippi. Mississippi is weird too. So, I mean, you know, come on. Um so those are gonna be some, and and actually I'm gonna talk a little bit about Oklahoma in a bit because while they don't follow some of the model acts, what they do is they have in their statute some of the things that, for example, Kansas or Arkansas has as an administrative rule from the Department of Insurance, which is again one of the things that I learned about when I was doing all this research. So, yay. Yeah.

William Auten:

Right on. Yeah. So um seven claim handling standards. So we've got seven rules here for adjusters.

Chantal Roberts:

Right. And like I said, I think there's like, I don't know, 11, 12, something like that, but they can usually be boiled down into seven.

William Auten:

Yeah. Yeah, these these seem pretty comprehensive, but uh for preliminary claims handling, what do we do?

Chantal Roberts:

You just we you gotta investigate promptly. You don't let it sit for, I don't know, weeks on end. And I know of an insurer and I cringe when whenever I talk to this adjuster, and this adjuster is telling me how the it their company doesn't have their own IT system for claims, and so it cost 500 bucks or whatever to have the third-party people uh update their claim system, right? And so they wait until the end of the month and give them all of the IT tickets at one time to update, and that means adding a new customer or writing a check or whatever, and so this adjuster can get a claim, but the claim doesn't even come into the claims system because that let's say client hasn't been input yet, or they don't have the correct data fields and they have to get IT to add the data fields, and so we're already a month late. So the adjuster is do I do I start adjusting and keep notes somewhere else? Kind of cringy, uh, or do I not do anything until it's all set up? All it that's very bad. So, you know, and I just sit there and scream at his employers who can't hear who can't hear me, excuse me. Oh my god, fix it immediately. You have no idea.

William Auten:

You and I probably came up in an age where paper files were kind of the primary way to manage a file. And uh all of our written notes and everything went in there, and the communication on screen was just kind of administrative. It wasn't really considered the claim file until oh, probably not too long after, say 98, 99, that around that time is where the system started to get a little more robust where you could put all those things in there. I think our first digital cameras came in around 1999. Um, they were around before then, but the right they they weren't generally used for uh claim purposes until around 99 from Mike's.

Chantal Roberts:

They weren't very good. They were they were slow and they were pixelated, low low quality and um memory running through my foggy mind. I don't even know the words.

William Auten:

Okay, I do now.

Chantal Roberts:

Oh, no, I don't know those. I I don't know if those are the words, I just know that memories uh claim procedures. Okay, so this is something that I really do not see in a lot of files, and and I mean as an expert witness, and the carriers will swear up and down that they have management oversight.

William Auten:

Okay, first to clarify what it is though.

Chantal Roberts:

Claim procedures means oh, like adjusters are trained and there's management oversight, right?

William Auten:

Right in and and oh document your training and document that a manager has been in the file and is watching what you're doing.

Chantal Roberts:

Exactly. And I'm more speaking to having management supervision because I cannot I could probably count on one hand for my expert witnessing career, which is only six years, but how many times I've seen a manager in the file. Now I've seen something that's as the kids these days say, super sus, which is suspicious, where I will get this file and there's the adjuster's notes, and then in red, there's the manager notes. And I'm thinking, I you mmm, that kind of looks like you added that a little later. I don't know. I'm just I'm just saying I don't I don't know. However, we have to have management supervision. So if you have that round table, like I I will see an adjuster note saying round table with so and so, but so and so doesn't also have their round table notes in there. Now I get the fact that we want to keep our round table notes usually very general, you know, because there's stuff that we're talking about. But you would say roundtabled with Tom, Dick, and Harry, we discussed reserves and bodily injury of plaintiff. Boom. That's what you talked about, and then Tom, Dick, and Harry need to be putting their notes in there. Had a round table with uh Dick, Harry, and Jane, blah, blah, blah. You see what I'm saying? And so those notes need to be in there, and so often I don't see them unless there is a complaint, and which is, you know, insured called, I returned their call, told them that the claims adjuster's doing whatever and blah blah blah. That's not it. You're supposed to be overlooking, and not just once or when the file's closed or whatever, but that would really keep people from getting off the tracks, so to speak.

William Auten:

Yeah. Um, so the uh when you say management, heavy management supervision, so define that versus somebody, uh a manager getting in the file and maybe giving some direction.

Chantal Roberts:

I think that is the the management supervision.

William Auten:

Okay. Okay. Um I thought you meant maybe you were talking about something else, like overall.

Chantal Roberts:

No, no, I think uh I'll give you an example, what we used to do at ARM. Uh, and and this wasn't in the initial note, but when we would assign a claim to the adjuster as the manager, we would send the adjuster note along with the claim setup people. We're like, okay, this is a general liability claim. It says slip and fall. You need to do a recorded statement of the insured, of the claimant, of the witnesses, get cleaning logs, get any film or camera, da da da da blah, blah, blah. And we would tell them what to do. The file's not set up, so we can't necessarily put that back in the file yet because we're giving them instructions prior to the file. However, then what we would do is seven days after the file had been open, we're doing our as a manager first report review. Has the uh adjuster reviewed and explained the policy language? Yes, no. Are there any coverage concerns? Yes, no. What are they? I'm seeing uh the insured, I don't know, um has a endorsement that says they have to clean it every hour and they didn't do it. So you need to send out a reservation of rights letter, except in New York where you would send out a what is it called?

William Auten:

Um conditional disclaimer.

Chantal Roberts:

Yeah, we wouldn't I don't think we would for that necessarily might be late reporting or I don't know, something you you you know what I'm at a minimum we would get a non-waiver, yeah. And and we would be okay, it's it's late notice, let's do that. Late notice. Oh, you need to send out uh ROR for late notice because this happened eight months ago, and I don't see you doing that anywhere. Did you explain it? And so, and then in 30 days we're we're sitting there going, why haven't you done this? Why haven't you done that? What are what is the answer to this? What is the answer to that? Have you thought about doing XYZ? Because as someone who has 25 years experience and someone who has five years experience, I'm trying to keep them on the track without going off to the side. And I can tell you, I've had younger adjusters come up to me and I've read the insured's correspondence, and I said, there is an attorney back there somewhere because that person doesn't know those words, and they are pushing all of the right buttons, so they are getting ready to set us up for bad faith, and we need to be very, very careful here because they're talking about blah blah blah, and da-da-da-da. I mean, I mean they're pushing all of the bad faith buttons, and and so you can see it coming a mile down the road, and then this is how you would cut it off. One short other example of a case that I'm working right now. The insured maybe a little unreasonable and a little self-centered, and you're waffling here, just say it like it is, Shanty. Well, it's an active case, so I don't want to go too far. Uh but uh concrete example, I mean, the adjuster's father died, and the insured actually wrote a letter or an email into the into the carrier saying, I don't care. Why isn't my claim being handled by someone else? And I'm like, wow, okay. Anywho, uh so you got that, but then no one responded to it from the carrier side, and that uh antagonized the insured even more because then the insured didn't feel heard. And this is antagonism goes goes both ways, it does go both ways, and and so I think that's one of the next points is communication, it has to be timely, uh clear, forthright. And I have skipped one, but that's okay because it kind of bleeds into this and easy to understand. And usually you have to only respond to things that reasonably need a response. So if the insurance says, I don't care that my adjuster's father died, what's going on with my claim? Do you do you need to respond to that?

William Auten:

I don't know. It could have been asked better. It could have been, um, you know, I'd I'd like to, you know, I'm I'm sorry to hear about the passing of the adjuster's father. I would like to get a status of my claim.

Chantal Roberts:

Right.

William Auten:

That's one way to handle it, too. Um true.

Chantal Roberts:

But the point is, is that even acknowledging the insured saying, I understand that uh you are impatient to find out the status of your claim as diplomatically as possible, then she or he would at least feel heard.

William Auten:

Right.

Chantal Roberts:

And that's part of the communications aspect. And it has to be timely, uh clear, forthright, and easy to understand.

William Auten:

So that's number four. It's just to summarize where we are in these seven rules. Uh, preliminary claims handling, be prompt, uh claim procedures. Uh you have trained adjusters that are managed, investigation. Um, investigations tailored to each claim, meaning that you're not going to just have a boilerplate uh list of things to do for every claim. We need some guidance and you have to be kind of tailored to the situation at hand. And then communications must be timely, clear, forthright, and easy to understand. There's three left here.

Chantal Roberts:

I know, but I want to mention one thing because I was doing a little uh I'm trying to make an assignment for my risk and management students 101, basically, because a lot of them are just saying, well, why don't we just plug in the policy into AI and let it tell us what coverages are? And I and I said, you know what? That sounds like a great idea until it's not, because it uh hallucinates, it you know, it eats shrooms every once in a while, and that sort of thing. So maybe not a good idea. And I had come across an article that talked about an insurer, I won't mention who it is, but they were using AI to write all the letters, their 30-day letters. And the quote was the adjusters are too busy to write it, so we're having AI write it. And I'm like, oh, oh, and that was actually from a state uh from a spokesperson. And I'm like, oh, this is why true, while true, you don't say that, but also they were the spokesperson actually said the reason they're using AI is because when cumans adjusters wrote the letters, the 30-day letters, it was too complicated with too much insurance jargon. And what the adjusters are supposed to be doing is using AI to write the letter, review it, make sure that it makes sense, and then shipping it off. But they're not doing that because adjusters are too busy. So anyway, FYI, it's got to be clear and easy to understand.

William Auten:

Yeah, yeah. So they they were they were trying, um trying to to uh to address that piece of it. Uh so kudos to them. Um, you know, right having AI write the communications to the policy holder. If it's a general communication, um, like we've received your damage estimate and it's currently under review, that kind of thing. Um, I don't see a problem with that. If uh if you're relying on it to make heavy-handed decisions about coverage um or damages, I think that's gonna get you in the hot water pretty quick. It has been.

Chantal Roberts:

Let's talk about momentum because this is where I see it most often, where things usually go off the rails. Adjusters are busy, we all know that. And there should be no unexplained delays in the claim file, right? Your dad dies. Okay, I mean, you're not gonna put in every single claim file. My dad died, I'm taking a week off, you're not gonna do that. But there shouldn't be three months of no file activity for nothing.

William Auten:

Right.

Chantal Roberts:

Again, another example would be let's say our date of loss is April 1st, and you're not cutting a check until December 15th. Why? I gotta, I why? This is my first question. Why did what uh eight months go by? With with without you, I mean, and and there's nothing in the letters, there's nothing in the claim notes that says why. You're also not making a decision slash resolution or analysis, which is the next one, analysis right after momentum, because that's you're documenting damages and applying them to coverage. Because by the way, you got to look at coverage five or six different times in the claim file. Every time you get a new piece of information, you're looking at coverage to see how things change. It's not just the first day.

William Auten:

Momentum just means uh primarily demonstrating that that you are working the file in some way. Um that it doesn't mean you have to settle the claim within a certain time frame if you don't have the information, but at least show that you're doing something to get the information. Uh, we have a lot of cases that linger because somebody is continuing to treat and our file is open for six or eight months sometimes, and the attorney just ignores us. What are we gonna do? Document the file. We tried, you know, we left messages, sent another. Follow-up email, it's the best you can do. Um and it but that's a reasonable delay because this person is not ready to finalize their claim yet, they're still recovering from a very bad injury, you know. So anyway, that's that's momentum um analysis. Um so that comes to documenting damages and applying the coverages.

Chantal Roberts:

Yeah, and and I mean I think that that's kind of self-explanatory. You get that estimate in or whatever, and you write that down in the file, and then you apply the analysis. Is there coverage? Is there not coverage? Why? Why not? How much are we going to pay? And then that leads right up into sometimes into the same file note of what your decision is. Yes, I'm gonna pay, no, I'm not gonna pay. I need to deny the claim. And uh again, it it needs to be a lot more detailed than what I am now seeing in claim files, because a lot of times uh what I am seeing in claim files is got the estimate from Jane Smith, the independent appraiser or field appraiser or whatever, and uh it's for blah blah blah, you $1,000, sent out a proof of loss and letter to the injured. Well, that doesn't tell me anything. Is it covered? Is it not covered? Why? What's the deductible? So usually what you should be doing is got the estimate, it's for location number one, which is da da da. There's coverage for that one and this poly, you know, and because again, you're looking at coverages, and then you go in the estimate is for a thousand dollars, everything is within coverage, like there's no mold that would have a mold exclusion or I don't know, whatever, and uh less you're five dollar deductible. So I'm gonna write a check for $995 to the insured, Mr. Insured, Mrs. Insured, and mortgage holder, and sending them a letter and a proof of loss and blah blah blah. And then you pick up the phone and call them and tell them all of that, too. So you that's the difference. And I'm gonna I will explain this. There, there is a reason why I'm harping on your claim note being that detailed. I'll get to it. I promise. I promise.

William Auten:

Um so one thing I would add to the analysis line is liability.

Chantal Roberts:

Um yeah, yeah. Well, if it's liability, absolutely. Yeah, yeah.

William Auten:

Yeah, so you you have to analyze liability, analyze damages, and then uh see how all of that fits into coverage. Um and when we when we talk about liability versus uh coverage on on third-party claims, that's an important conversation to have both with the policy holder and with the uh actually with the claimant as well, so that they understand. Look, we're not saying necessarily that the insured didn't do anything wrong here. They absolutely did something that was wrong or negligent. It just turns out that there's no coverage. So that doesn't mean that you don't have uh, you know, a valid claim. We wouldn't actually say, you know, oh yeah, you got a great claim. Go ahead and and sue the insured. Yes, sue the insured no coverage, but go ahead. No, we don't do that.

Chantal Roberts:

Be our guest.

William Auten:

But that's a that's a dance you've got to do. You've got to have a conversation that's uh uh about those facts, and you've got to be able to say, okay, here's a situation. We know Mr. Insured did something that may or may not have caused harm or damages to you. Uh the details of that will be worked out later, and we can't really comment on that. But what we can comment is that what was done here does not fall under a covered occurrence or whatever, and is not covered under the policy. So we can't defend the insured and we can't indemnify them for any damages that they might owe. That's the best it's a lot of words, right? Right. You say that to some you say that to somebody who who has no background in insurance claims, they're gonna be like, Why are you talking to me like you're a lawyer? I'm I don't, you know, why don't you just tell me straight up what you mean? And there's no easy way to do it because this is kind of a complicated business. Um anyway, that's my aside on analysis.

Chantal Roberts:

I have so many thoughts. No, and and I love this that you said that because it brings up a very good point. And it's something that I tell my students, showing them that even I was I even I am human, is that Professor Roberts it probably took me a good 10 years, even though I knew it innately, I couldn't put words to it. That liability is a two-step process. You have coverage and then you have liability. And unless you have both of them saying yes, is their coverage yes? Is is the insured negligent or is the insured liable? Yes, that's the only time you would pay. Is there coverage no, but the insured is responsible? You don't pay because there's no coverage.

William Auten:

The insurance company doesn't pay.

Chantal Roberts:

Well, the insurance company doesn't pay.

William Auten:

And that's the distinction that a lot of people don't even know break.

Chantal Roberts:

Right.

William Auten:

They don't, they think they're in they're suing the insurance company, right?

Chantal Roberts:

And and and the thing is, is that so many consumers don't understand it's a two-step process. So even if the adjusters don't understand it as a two-step process, think about the consumers. And to answer your question about you're using all of these big technical terms, I always, when I'm speaking again to my to my students, I do this, I use the insurance word, and then I use the common everyday word. Subrogation, I mean reimbursement. So how would you describe payment?

William Auten:

Describe indemnity uh in you know in I mean indemnity is not terribly um it is hard word complicated, but um how would you just how would you kind of simplify the word indemnity when you've got um when you've got contractual indemnity uh between a landlord and a tenant, for example, um, and you've got to explain that concept to someone who's not an insurance person, it's not easy to do all the time.

Chantal Roberts:

It it is not all all the time easy, and that's when you would go, okay, so you've written so you've signed a contract that says that you are going to indemnify, which means pay your landlord if something happens to the property. That's how I would do it.

William Auten:

That's and this is the this is the word game we have in this job every day. Absolutely.

Chantal Roberts:

Oh, there's like even explaining liability. Oh, you're liable, you're negligent. Well, okay. Anyway, let's move on. Because but uh by the way, this does go to communication and being able to speak plainly and in a term that's understandable, which is again why it's easier to have these phone conversations and then maybe put the letter a little bit more formal.

William Auten:

Right.

Chantal Roberts:

Um, so anyway, uh I'm not gonna go over timing and stuff because I think a lot of people do, and and we're probably you know running out of time or or whatever.

William Auten:

Uh but we should put your uh seven claim handling standards in the show notes.

Chantal Roberts:

Oh, yeah, yeah.

William Auten:

That'd be a good idea.

Chantal Roberts:

Okay. And and so we all know as adjusters that there are timelines that we have to meet and deadlines that we have to meet. We have to pay within 30 days, or if we can't do that, like what Bill was saying, you you send out a letter, and I was talking about the 30-day letter. So what we also need to do with our issues again, making sure that our file is properly documented and everything. This is I'm gonna kind of skip or combine number six and seven for for us, Bill, since we're kind of running out of time. Sure. I wanted to talk about Oklahoma. And this is part of the thing that I learned about when I was, you know, looking into this Dallas uh talk that I was doing. And so Oklahoma has a statute, because remember, Oklahoma doesn't adhere to the model laws, they have their own gigs. And one of the statutes in Oklahoma is that an insurer's claim file shall be subject to an examination by the insurance commissioner. Every single law in every single state that I've ever read has that rule. Okay, whether it's in the unfair trade practices, unfair claim settlement practices, whatever. Such files shall contain all notes and paper work papers pertaining to a claim in such detail that pertinent events and the dates of such events can be reconstructed. So let me tell you what that means. That does not mean copy the email that you just got sent and put that all in the claim file full. You put the the email into the claim file, but you don't cut and paste that email. What they're talking about in such detail, pertinent events that such events can be reconstructed. What they're talking about is your mental interpretation of that, so that if you got struck down by a bus, God forbid, we could pick up the file and handle it. So insured sent in uh paperwork concerning the uh painting of their garage, and they wanted it to also be hand stained. This is again an alg an algamation of a bunch of claims that I've seen. And what the adjuster did was send out a very, very wordy change, you know, yeah, it it was just words, basically. There were words in this email. Lots of words, there were lots of words, and you had to read it three times to figure out that what the adjuster was saying is we will pay to paint your garage, but we will not pay to hand stain your garage. Okay, so if you think about that, we will not pay to hand stain your garage, that's a denial, or maybe not a denial, but because there's no policy language, or there is, it says that we're gonna pay reasonable repairs. And the adjuster felt that hand staining the garage was not reasonable. However, how do I know that? Because all of the notes say got insured, got email from insured repainting and hand staining, hand staining not warranted, sending email to insured about this. That's it. There's nothing in there that that says policy language states that we will pay reasonable repair cost. And I don't, I believe that this can be repaired via painting, not hand staining. Therefore, I'm going to send out a letter explaining this. Maybe not a denial, maybe a reservation of rights letter. I don't know. You know, but you need to do something more than a rambling email that denies a claim, and you need to do more than uh this is not warranted. I'm gonna send out an email to that effect. Why is it not warranted? I don't know.

William Auten:

Right.

Chantal Roberts:

You need to tell me, and that's what the Oklahoma statute says. Okay, so this leads to the next thing, which is that, of course, as we've talked about, every state has their own departments of insurance. The departments of insurance, being a governmental entity, have their own codes of enforcement. These are called administrative codes. And uh, this is where you will see in those states like in Arkansas that have already gotten the model acts into their statutes, you also got to go to the Arkansas Department of Insurance and look up their administrative codes for claims handling. Because that's where they're going to say, put in what you're thinking right now. And and so that's where you can get tripped up as well. So brand new set of rules. Who knew? Oh my gosh, yay.

William Auten:

Well, uh So you're saying that you have to not it's not enough just to put the documentation in the file. It's uh you also have to demonstrate that you understand um the documentation, and then you've got to be able to also communicate the decisions that you're making on the file, not only in the file, but to the policy holder in a way that everybody can understand.

Chantal Roberts:

Yes. Okay. That's what I'm saying. Yes, yes. Thank you for summarizing that because it's a lot, and it is, I don't know, um.

William Auten:

And this is the uh this is governed by statute. You're not just making this up.

Chantal Roberts:

This and this isn't just um or it's administrative code where the DOI can go, yeah, I'm gonna take away your license.

William Auten:

Right. So we have Regulation 64 here in New York, we've got um insurance law, you know, the 3400s, you know, the that all dictate, you know, the timeliness things and uh unfair claim practices and and all that stuff. Um so yeah, and you've got to be familiar with them. And if you're a manager uh or if you're running a claims department, you have to make sure your people know this stuff. Um and it needs, you know, have seminars, you know, have your weekly meetings or monthly meetings where you just carve out 10 minutes to talk about something from those regulations so that everybody and then document that you did it so that you have a history because you don't want the only history that you you don't want to be in a situation where the only history that you have in your claim files is a consistent lack of attention to detail. Yeah, notes missing, delays. If if if all the documentation you have supports that and you don't have any documentation showing that you are consistently trying to teach your people how to conduct yourselves within the laws of your state, it's gonna be a problem and you don't want to have a problem.

Chantal Roberts:

It is, and then I hate to say it because I don't want to uh you know throw anyone over or anything, but if you're having these regular training events and you've got that one adjuster who just is not doing it, then you you've got a rogue adjuster. And that that adjuster needs to go because that adjuster is going to get or be retrained, or you know, or or or be recalibrated. Well, I mean, sometimes you just can't retrain them and you just need to let them go. Um, but here's after I say all of all of this, I do want to give a a closing kind of thought. Uh, because I think that that I try to do the whole gloom and scary and and all of this kind of stuff. But remember when we started off, you as an adjuster and even as an agent have the right to be wrong. As long as, and you had said it, Bill, as long as you're not acting with dishonesty and being willful and being malicious and being just hateful. Uh, just like you were talking about with all of the industries, not just ours. Uh, that's when we started to get that history. You said it really, really well. So you've got the right to be wrong. You you as an adjuster can make the wrong decision. And they can sue you for bad faith, which is when I get involved. And I'm like, yeah, no, they're they're okay, or oh yeah, they totally messed this thing up.

William Auten:

They did the best with the best with the information they had at the time. That's what you want to strive for.

Chantal Roberts:

Exactly.

William Auten:

Is that somebody's gonna say, you know what? Bill Bill made a bad call call here and uh something went south on it, but he didn't know all of the stuff we know now when he made that decision.

Chantal Roberts:

And that's why I'm saying, too, if you just have an uh a claim note that says hand staining not warranted, well, why? I don't know why. So I think you can be being malicious or hateful or ugly or whatever. But if you sit there and go, I think that actual painting will be fine because of the age of the wood, or yeah, I think mechanical sanding will uh whatever, whatever you think, put it in there. You can be wrong, but it it it won't be as bad. You can make a mistake.

William Auten:

And what I what I had just said about you know not having the information at hand, maybe you should have, you know, maybe maybe that's not an excuse. Maybe the information that you didn't have you should have had because of training or because of, you know, were you just uh being ignorant and ignoring uh whatever um on your staining um staining example? Um is this a person who has zero experience with wood and stain and doesn't really know that staining wood is a thing and never heard of it before because they lived under a rock?

Chantal Roberts:

Right. Um they live it, they live in a brick house versus a wood house.

William Auten:

Right.

Chantal Roberts:

I mean, but but you're absolutely you know, and then they go, well, you know, and making that note, that claim note, detailed claim note. I spoke with Bill, who is a claim, you know, who is the field adjuster, and he stated that blah blah blah blah blah. So I'm gonna blame you. And and but at least I'm making my decision based off of advice. It's kind of like making a claim, uh coverage decision based off of advice of counsel. It could be wrong, but uh that's what you did at the time. Okay.

William Auten:

We we have a lot of high-stakes cases involving uh the need for uh various subject matter experts. And the reason we need those experts is because um, like I said, the information that we need to make the decision, we can only guess at now. Right. We can Google it, we can watch YouTube videos, we can plug it into AI, and we can get all the answers that we think we need to make the right call. Uh Um but without like an expert telling us really the facts as as that expert sees it, um, we're just guessing. And and in those scenarios, it's it's beholden to the insurance company to uh to get the experts they need to make the right decisions. Because I do see uh I do see a hesitancy to spend the money on experts or um you know getting them in too late. Or just kind of just kind of um write it off as if it's not a big deal. You know, everybody can see this is plainly the fact. Uh okay, you know, are you an expert in that kind of injury? Do you really know that they should have healed in four weeks instead of eight? You know.

Chantal Roberts:

Um yeah, because what if you have an eggshell plaintiff?

William Auten:

Yeah. So my my point in that is um you do have the right to be wrong, but you have to be really careful with that and make sure that um you're not in a situation where you're just kind of shrugging your shoulders and saying, Oh, well, I guess I was wrong. I didn't know.

Chantal Roberts:

Um and again, I would I would point out again, this is where your claim notes say, because this is where your logic is. It's it's not I'm gonna do this because I think because you know, Dr. Google said blah, blah, blah. It's I'm going to do this because counsel said to, or I'm gonna do this because the field adjuster who talked with the roofer told me XYZ. You know, you're you are explaining your logic. And then if that logic is incorrect because you've relied on wrong information, that's it. And and if you need, or I'm gonna do X because I hired an engineer, and the engineer said XYZ. That's what you do. I mean, that's when you rely on that aspect. Yeah. So claim notes, also bad thing. All about communication and documentation and decision making and all of that. It'll be in the show notes. Anyway, like, comment, share, subscribe. Tell us about your worst claim thing. Tell us about your bad faith claims, tell us about an idiot claims adjuster. I don't know, whatever. Tell us something. I just like it.

William Auten:

Tell us stories.

Chantal Roberts:

Tell us stories, tell us if you like these darn adverts that I make. I don't yes.

William Auten:

I'm trying. So the when we do these episodes, uh, the the the most feedback that we seem to get is on LinkedIn.

Chantal Roberts:

Yes.

William Auten:

Uh, which I encourage. I think that's a great platform. Uh you and I are there all the time. All the time. Um, commenting and and uh having fun and promoting what we do here. So uh if you are on LinkedIn, please follow both of us. Um reach out and say some kind words or ask a question if you've got a question about anything we say here.

Chantal Roberts:

And and be sure to like like the adverts that we're doing because oh yeah, LinkedIn algorithm doesn't like us self-promoting, so FYI. But if you like and subscribe and comment on Spotify and YouTube, that does push the algorithm does push up on things. Okay, so our next episode, by the way, is January 15th. It's the anatomy of a slip and fall claim, which is super exciting. Uh, I can't wait to hear. No, I'm serious. I can't wait to hear some of your thoughts because Oh, we have so many fun things to talk about. We do, we have so many fun things to talk about.

William Auten:

We have uh I don't think you can can you see this paper on the door over here?

Chantal Roberts:

Uh-huh.

William Auten:

That is that is our espinol uh cheat sheet. Espinol is a case here in New York that uh uh relates to snow removal contractors and uh their liability. So uh yeah, lots I could we could do three or four episodes on slip and fall cases, especially after last year.

Chantal Roberts:

Oh yeah. All right. Well, think about your new year's resolutions, make them to be big claim notes and everything, and management supervision, and I don't know what else.

William Auten:

Go out and enjoy the day. Uh the day off today, January 1st, right? And absolutely uh kick off the new year.

Chantal Roberts:

Yeah, we'll see you on the 15th.

William Auten:

All right, take care. Bye. Thanks for joining us on the Art of Adjusting Podcast, where we talk about life as an insurance adjuster. Hit that subscribe button real quick and tell all of your adjuster friends to check this out as well. For independent adjusting services, go to www.autin.claims. And for anyone interested in working as an independent liability adjuster, go to the contact us tab to join our roster.

Chantal Roberts:

So this wraps up another Art of Adjusting podcast. If you enjoyed this podcast or this episode, please give us five stars and a review. It does help the algorithm pick us up. In the meantime, you can contact me at theartofadjusting.com for consulting and training purposes.

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Chantal M. Roberts, CPCU

Co-host
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Heather Blevins, CPCU

Co-host
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Sandy Avina, MBA

Co-host
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William Auten

Co-host
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Nicholas Kearns

Editor