We are pleased to introduce Kevin M. Quinley, our guest blogger. He has a great blog on his own site, www.claimscoach.com, and has graciously allowed us to feature him as a guest blogger. Kevin Quinley CPCU, ARM, AIC is the principal of Quinley Risk Associates LLC, a boutique claims consulting firm based in the Richmond, Virginia area. He provides his nationwide clientele with services related to claims training, productivity, litigation support and expert witness services. He is the author of 10 books and over 600 articles on various aspects of insurance, risk management, claims handling and litigation management. You can reach him at *protected email* or at his website, www.claimscoach.com.
Police Reports: Investigative Linchpin or Adjuster Crutch?
To what extent should an adjuster rely upon a police investigation? Should it substitute for the adjuster’s investigation or part of it? Or, should it simply augment the investigation but not be viewed as a substitute for it?
This issue arose recently in the context of a bad faith claim where I was engaged as an expert witness. The plaintiff/policyholder alleged, among other things, that the insurance carrier failed to conduct an adequate investigation. Part of the argument was that the insurance adjuster relied too much on the police investigation and did not do more in the way of taking a formal statement from the policyholder and interviewing witnesses.
The Police Report reflected the account of the incident (an alleged assault and battery) from the standpoint of the insured and of witnesses. There was no dispute about what happened in the incident itself. The coverage dispute pertained more to the policyholder’s intent and whether his actions triggered the “expected or intended” or the “willful and malicious” policy exclusions.
This raised the issue as to whether adjusters are obliged in every case to go beyond the Police Report or whether, in certain cases, the report can be the cornerstone of an adjuster’s investigation.
As new adjusters, we are often taught — rightly — to NOT view police reports as sacrosanct. Police Reports can contain errors, just as medical reports or even attorney reports can contain errors. Typically, police are not eyewitnesses to an accident or incident. Their reports will capture facts relevant to the breaking of laws and ordinances.
However, in some instances a Police Report might serve as the cornerstone of a claims investigation. This is not to say that the Police Report always constitutes the end-all and be-all of a claim investigation. It is not to say that the Police Report is necessarily the entirety of an adjuster’s investigation. However, there may be situations where there is no need for the adjuster to plow the same investigative ground that the police have tilled if the basic facts of a claim are not in dispute.
Consider a straightforward accident where Car A rear-ends Car B. No one disputes that, and it is reflected in the police report. Is the adjuster still obliged to track down, identify and take statements from all witnesses? At some point, this appears to be overkill.
Unless the adjuster is on notice that the Police Report is in some way erroneous or disputed, and if nobody disputes the basic facts of a straightforward accident, there may be instances where the adjuster can rightly rely on a police investigation for the bulk of the fact-finding without being accused of laziness.
The overarching principle is that adjusters and insurance companies are obliged to conduct reasonable investigations. This is required in many state unfair claim practice statutes. It is also found in the NAIC Model Unfair Claim Practices Act. Of course, “reasonable” is not defined. There is no paint-by-numbers description of what goes into reasonable. The statutes do not delineate the components of a “reasonable” investigation. What is reasonable in terms of investigation must be determined by the particulars of each individual claim.
At one extreme, you have straightforward scenarios where it is undisputed that Car A rear-ended Car B. If the police report reflects that, both drivers agree and there is no evidence to the contrary, then perhaps the police report can serve as the cornerstone of the adjuster’s investigation.
At the other extreme are complex and disputed facts situations. These could include the Deepwater Horizon oil spill in the Gulf of Mexico or the Fukushima nuclear meltdown in Japan. Here, official reports might be taken with a grain of salt and should be the starting point, not the endpoint of an insurer’s investigation.
So, where do you stand on the issue? Are there situations where the Police Report can substitute for a big chunk of the adjuster’s investigation, OR is the adjuster obligated to always go back over the features captured in the report?