Los Angeles Claims Adjuster Property and Causality Practice Exam

What is the first step in the investigation of a claim according to claims adjusting standards?

1. Determine the extent of damages

2. Verify coverage under the policy

3. Gather witness statements

4. Set claim reserves

The correct answer is: Verify coverage under the policy

The first step in the investigation of a claim according to claims adjusting standards is to verify coverage under the policy. This step is crucial because it establishes whether the claim being submitted falls within the terms of the insurance policy. Understanding the coverage helps to identify what types of losses or damages are covered and ensures that the insured is eligible for compensation under the policy's provisions. Verifying coverage involves reviewing the specific language of the policy, including endorsements, exclusions, and limits. This foundational understanding guides further claims handling decisions and helps to manage expectations for both the insurer and the insured. If the coverage verification reveals that the claim is not covered, the claims process may be significantly shortened, as there will be no liability for the insurer to address. Following verification of coverage, steps such as determining the extent of damages, gathering witness statements, and setting claim reserves become relevant, but these steps depend on having a solid understanding of the policy's applicability.