How to Deal With Liability Claims


Adjusting Liability Claims

The following is adapted from the new Second Edition of the Compact Book of Adjusting Liability Claims that will be available shortly on

Adjusting liability insurance claims requires skill, patience, knowledge of insurance, basic knowledge of tort and contract law, and knowledge and experience as an investigator. The liability claims adjuster is faced with the following basic obligations:

  1. To understand the law of torts as applied in the state where the adjuster works.
  2. To understand the law of contracts as applied in the state where the adjuster works.
  3. To understand sufficient medical terminology to be able to evaluate claims of injury.
  4. To understand the costs to repair or replace damaged real or personal property.
  5. To understand how to read and apply the terms and conditions of a liability insurance policy.
  6. To understand how to thoroughly investigate all claims assigned.
  7. To conduct an investigation of every claim assigned fairly and in good faith with an intent to find coverage for the loss presented by the insured.
  8. To understand how to analyze the insurance coverage and apply the facts established by the adjuster’s thorough investigation to the policy wording.
  9. To be able to negotiate with claimants and lawyers to resolve bodily injury or property damage claims.
  10. To pay promptly all claims the insurer owes under the contract.
  11. To resist, and not pay, all claims the insurer does not owe under the contract of insurance.

In the United States, the average adjuster is a 22-year-old female graduate of a liberal arts college who has little or no training sufficient to allow her to fulfill the obligations imposed on her as a representative of an insurer. Much to the chagrin of insurance claims professionals, some modern insurance companies simply hire a person to be an adjuster, provide no training, and send them out to deal with the public with only the assistance of a claims supervisor who may only have two years-experience.

This Compact Book of Adjusting Liability Claims- Second Edition is designed to provide the new adjuster with a basic grounding in what is needed to become a competent and effective insurance adjuster. It also works as a refresher for the experienced adjuster.

The liability claims adjuster quickly learns that there is little difficulty with a claimant (the person alleging bodily injury or property damage against a person insured) if the claim is paid as demanded. The insured may be unhappy if the claimant’s claim is paid as presented since most do not believe they did anything wrong or fear an increase in premiums charged for subsequent policies.

The adjuster must be prepared to salve the insured’s emotions, explain why in the law and the policy it was appropriate to pay the claimant and that the settlement is in the best interest of both the insured and the insurer the adjuster represents.

The adjuster knows, and must be prepared to explain to an insured, that if a claim is resisted or denied the claimant will be unhappy and will probably file suit. If not promptly settled the claimant’s lawyers will rake the insured over the coals to prove that the insured is liable for the claimant’s injuries. The litigation will take time, effort, and money to establish the extent of the injuries and who is responsible for the injuries. Failure to settle promptly can cost the insured his or her reputation, his or her time in deposition and assisting defense counsel, and will certainly cost the insurer much more than the claim could have been resolved for had it been resolved before the claimant retained a lawyer.

The adjuster must also understand that investigation may establish that the insured is not responsible for the injuries claimed.

Since most people would prefer not to be deposed by a claimant’s lawyer nor would they want to be cross-examined during a trial, it is the duty of the adjuster to explain to the insured the insured’s responsibility to assist in the defense of the eventual lawsuit. The duty to settle is not unlimited. It is also the obligation of the adjuster to prevent a claimant taking advantage of the insured and the insured’s insurer when investigation established that the insured is not responsible for the injuries claimed by the claimant.

The liability adjuster must also be knowledgeable about the fact that many liability claims are part of fraudulent schemes that are used by the unscrupulous to profit from fake accidents and injuries.

The best estimates the insurance industry has established is that insurance fraud takes more than $80 billion and up to $300 billion from the industry every year. Almost all of those less than legitimate claims are paid because:

  • The adjuster is untrained.
  • The adjuster is minimally trained.
  • The adjuster is either unable or unwilling to perform a thorough investigation.
  • The adjuster is so inexperienced that he or she does not know how to investigate.
  • The adjuster is unable to read a policy with comprehension, because
    • He or she has not been trained.
    • He or she has been trained inadequately.
    • He or she has no legal training and do not know the rules of contract interpretation.
  • The fraud perpetrator is intelligent, not greedy, and knowledgeable.
  • The insurer does not want to fight because legal costs to fight a fraud exceed the value of the claim.
  • The adjuster does not recognize the fraud.
  • The police authorities refuse to investigate, let alone, prosecute insurance fraud.

A thorough investigation of a claim must cover the duty the adjuster owes to the insured and the insurer. A thorough liability claims investigation allows the insurer, by the adjuster, to keep all of the promises made by the policy.

The liability claims investigation should never be limited to “holding the claimant down to what he asks for” or just giving a blank check to claimants. The adjuster’s obligation is to deal fairly and in good faith with the insured, the claimant, and the insurer.

© 2019 – Barry Zalma

This article, and all of the blog posts on this site, digest and summarize cases published by courts of the various states and the United States.  The court decisions have been modified from the actual language of the court decisions, were condensed for ease of reading, and convey the opinions of the author regarding each case.

Barry Zalma, Esq., CFE, now limits his practice to service as an insurance consultant  specializing in insurance coverage, insurance claims handling, insurance bad faith and insurance fraud almost equally for insurers and policyholders. He also serves as an arbitrator or mediator for insurance related disputes. He practiced law in California for more than 44 years as an insurance coverage and claims handling lawyer and more than 50 years in the insurance business. He is available at and

Mr. Zalma is the first recipient of the first annual Claims Magazine/ACE Legend Award.

Over the last 51 years Barry Zalma has dedicated his life to insurance, insurance claims and the need to defeat insurance fraud. He has created the following library of books and other materials to make it possible for insurers and their claims staff to become insurance claims professionals.

Passover Seder for Americans

Passover is one of the many holidays Jewish people celebrate to help them remember the importance of G_d in their lives. We see the animals, the oceans, the rivers, the Passover Seder for Americans: An All English - Easy to Perform - Passover Seder by [Zalma, Thea, Zalma, Barry]mountains, the rain, sun, the planets, the stars, and the people and wonder how did all these wonderful things come into being?

All Jewish fathers are required to teach their children, at least once a year at the Passover holiday, about the exodus from slavery in Egypt. For American Jews who have difficulty understanding Hebrew and complicated books describing the Exodus, my wife and I wrote this book to use for our own Seder where each member of the family reads part of the book.

Available as a Kindle book or a paperback at here.



About Barry Zalma

An insurance coverage and claims handling author, consultant and expert witness with more than 48 years of practical and court room experience.
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