March 31, 2008 by
Investigating liability claims requires many skills. Adjusters must identify and answer questions about coverage under the policy and about whether liability will be assessed against the insured. In addition to using common sense, adjusters must use their analytical skills to assess policy coverage and their powers of observation to identify factors that might affect the outcome of a claim. In this article, we examine several basic issues that adjusters should consider when investigating a premises liability claim.
Coverage under the policy
Coverage is the first issue for loss adjusters to address. Among other things, it must be clear that the insurance policy covers the person being pursued for damages.
If it becomes clear there is no coverage for the party being sued, that person must be notified promptly because the party will have to conduct his or her own defence.
When there is doubt as to whether coverage will be available to the insured, the adjuster should obtain a non-waiver agreement or issue a reservation-of-rights letter. Doing so protects the insurer against the possibility of estoppel — the possibility that the insured will allege he or she was led by the insurer to believe the claim was covered under the policy and was therefore lulled into a false sense of security. If the insured succeeds in this argument, the insurer will not be permitted to deny the claim.
Once coverage under the policy is confirmed for the insured, the adjuster can proceed to determine whether the third party claim is covered under the policy.
When a loss occurs at the insured’s premises, the location and use of the insured building must be identified. For example, the adjuster notes in the claims report the address of the loss location and that it is a private, two-storey house with a basement apartment. This should match the policy information.
Any record of previous losses, especially ones of the same type and at the same location, should be examined. Reviewing these cases may provide the adjuster with useful information.
Depth of an investigation
In a few cases, the circumstances of the loss will be self-evident.
But in the investigation of most liability claims, the basic details of the incident must be thoroughly developed. The adjuster should have an answer to these questions :
• What are the facts of the case?
• What documentary evidence is available?
• What additional information is required?
• What is the legal liability of the insured for the occurrence?
• Is there any other party who bears any responsibility for the action?
• Is there any other insurance policy that might come into play?
• Is there a need to retain an expert?
The adjuster must visit the scene of the loss as soon as possible and must obtain a statement from the insured regarding the circumstances of the loss. All witnesses should be identified so that statements can be taken if required.
When the loss circumstances are unclear or complicated, the report of an expert might assist the investigation. For example, an engineer’s report might show defects in building construction, sidewalk construction, or staircase construction.
Relationship of claimant to insured
Why was the claimant on the premises? The relationship of the claimant to the insured must be considered because it may affect coverage under the policy or the application of civil law. For example, workers’ compensation laws may apply if the claimant is an employee of the insured.
Determining legal liability
Are the premises a private or public venue? Lease agreements should be examined whether or not the insured is a tenant or a landlord. If the accident occurred on part of the premises used by all tenants and visitors (e. g., common staircase, elevator), the law may recognize either the tenant or the landlord as the “occupier.” However, if the area is controlled and maintained by the owner, then it is the owner who owes the duty to the person using it.
Use and condition of the premises
Establishing the condition of the premises can be accomplished by photographing the scene of the accident. The adjuster should have a clear, concise description of the site and any characteristics that affect its use. It will be helpful to know whether the area was subject to frequent or regular traffic and whether the claimant used it regularly. Anything that indicates a degree of danger — including any concealment, any situation that can be considered a trap, and any other relevant physical characteristics — should be recorded.
Defects or deterioration in construction
If the claim is potentially the result of a defect or deterioration of the building, the adjuster must gather information on other parties that may have responsibility. For example, liability may extend to an architect if the cause of loss relates to a defect in the design of a new building. A general contractor may be held responsible for a building construction error or fault.
A description of the lighting, including the voltage of each light, whether the lights were on or off at the time of the accident, the location of all windows, and the size and type of glass are all factors that will add to the investigation. Since the amount of natural light may also be a factor, the adjuster should obtain a weather report that pertains to the date and time of the loss.
When investigating slip and fall cases occurring on a sidewalk, adjusters must be aware of the law ruling the situation, whether it is common law or a provincial or municipal statute. A municipality may pass a bylaw outlining an adjacent owner’s responsibility to keep a walkway clear of ice or snow. The adjuster must establish who is responsible for the sidewalk. If the premises are rented, all contracts must be examined, including those between landlords and tenants. Again, a weather report can be helpful to establish snowfall levels and whether the sun was shining at the time of the loss.
Injuries on stairways require special attention. A complete description of the stairs is needed, including the location, lighting, measurements of the tread and the riser of all the steps in the staircase, the construction of the step, and the condition of both the floor and the covering. Any safety equipment installed should be noted. For example, was nonskid nosing used on each step? Were handrails installed? Any such structure must meet provincial building code standards. Also, the precise location of the fall should be identified and the nature of the fall should be described — was it a slip or a loss of balance?
The adjuster must be able to answer the following questions:
• What were the stairs used for?
• Why was the injured person in the building and on the stairs?
• Was the injured party familiar with the stairs?
• Did the party use the stairs often? • Had there been any previous falls on these stairs?
Photographs of stairs do not provide enough detail. Photographs can tell a useful story, but they often need to be supplemented with sketches, drawings or plans that accurately detailing the measurements to scale.
If someone has slipped on a floor, the adjuster must describe the floor in detail. What is the composition of the floor? Is there any evidence of repairs? Is the floor clean? Was there a wax finish applied? There are many different kinds of floor wax, some of which are designed to be skid-proof. The adjuster must determine the type of wax used, when the floor was last waxed and by whom. A statement from the maintenance person or independent contractor will help to indicate:
• how the wax was applied;
• whether manufacturer’s directions were f
• whether the usual product was used;
• whether any specific instructions were given by the insured;
• whether the flooring was inspected after it was waxed; and
• whether any defects were noted
When the slip involves a foreign substance on a floor, the adjuster must examine the substance promptly in order to
record the location of the spill, and identify the substance. This may require the help of a chemical expert.
The adjuster must be alert for any circumstances that
suggest another party may be implicated in the cause of the accident. For example, area mats and carpets at doorways in commercial premises are sometimes provided and maintained by independent contractors.
The adjuster must also identify situations where the claimant might have contributed to the accident, or where the claimant may have known of the hazard or risk and may therefore have to accept some responsibility for the injury suffered. In law, this is known as contributory negligence. For example, in a slip and fall situation, did the injured party’s choice of shoes play a role in the accident? Was there any substance on the sole of the shoes? Could the design or construction of the shoes have contributed to the cause the accident?
Leading to good claims decisions
The insurer will be able to make better decisions on a liability claim following a full investigation. Using all applicable skills and sources for information, the adjuster is better equipped to make recommendations on coverage, assessment of liability, and assessment of damages.
This article is based on excerpts from the study material in the Claims Professional Series of applied courses — a core of the CIP Program that helps adjusters learn the functional knowledge and skills required of their profession.