The Claim File
by Guy E. Burnette, Jr., Esquire
The claim file is usually the most important insurance file to
be reviewed by the investigator. It is a file which is created when a claim
is reported and documents every aspect of the claim handling process. It
should always be reviewed by the investigator in any fire investigation.
The first document found in the claim file is the initial notice of
loss, usually an "accord form" which is a standardized form
used by most insurance companies. In most cases, the loss is reported to
the insurance agent who completes the form and sends it to the claims office
of the insurance company. It is sometimes reported directly to the insurance
company, particularly those insurance companies who do not utilize insurance
agents to sell the policies (known as "direct writers") such as
GEICO, USAA and a number of other companies. This is an extremely important
document in the claim file because it contains the information initially
provided by the insured when reporting the loss. The form has a number of
sections for the basic information about the policy, such as:
- the named insured
- insured location
- policy term of coverage
- amount of coverage under the policy
- policy number
- the "producing agent" or "producer" responsible
for the policy
This is filled in by the agent when completing the form. In addition
to this basic information, the notice of loss form contains specific
information about the loss as reported by the insured. This includes
the date and time of the loss, the type of loss, the preliminary estimate
of damage, the person reporting the loss and the time it was reported. While
the form is filled in by the agent, most of this information comes directly
from the insured--such as the time when the insured learned of the loss,
and the time it was reported to the agent or insurance company. This may
raise questions about an insured's alibi and activities at the time the
fire was discovered. As a statement of the insured, it will likely be
considered admissible evidence in a criminal or civil trial--even if the
insured never testifies at trial--where the insured is alleged to be responsible
for the fire. As such, it is a critical document in the case.
Most of the other information in the claim file follows the chronology
of the claim process. Most insurance companies keep a "claim log"
or "claim diary" recording every activity in the handling of the
file on a daily basis. This document provides a useful chronicle of the
claim history from the time it was first reported to the insurance company.
As the various activities noted in the log or diary are conducted, the claim
file will contain the documents and records associated with those activities.
When a fire investigator is hired to determine the origin and cause of the
fire, the fire investigator's report, photographs, diagrams and related
documents will be in the claim file. The analytical reports of any forensic
laboratories who examined evidence from the fire scene will be in the claim
file. The assigned claims adjuster will usually visit the fire scene and
take additional photographs for the claim file. A preliminary recorded statement
of the insured is usually taken within the first few days after the fire
is reported. Once again, this can contain significant information about
the circumstances of the fire, the insured's activities around the time
of the fire, the time and means by which the insured learned of the fire,
anything significant noted by the insured at the fire scene, the insured's
knowledge of any potential or actual cause of the fire, the estimated damages
from the fire and other such information. As a statement of the insured,
it will generally be admissible evidence at trial.
The assigned adjuster will usually prepare a preliminary estimate of
the damages from an inspection of the fire scene. This is called a "scope
of damages" or "scope". A licensed contractor or a contractor
specializing in fire reconstruction is retained in most cases and will prepare
a detailed report which is part of a claim file. Other specialists
may be needed to assess the damages from the fire and their reports will
be in the claim file as well. This may include structural or mechanical
engineers, equipment specialists, inventory specialist who physically inventory
and value the damaged property, salvors who determine if there is any property
which can be salvaged from the fire and sold to reduce the loss, accountants
to determine the amount of covered damages and various other experts.
The claim presented by the insured will be found in the claim file, consisting
of the Sworn Proof of Loss and inventory of damaged property, together
with any supporting documentation. The assigned adjuster will prepare a
report analyzing the claim and will determine the "adjusted value"
of the claim under the applicable coverages and limitations of the policy.
All of the correspondence to and from the insured will be in the
claim file. The documents and correspondence from the insured will generally
be admissible evidence in a criminal or civil trial. They may form the basis
of an arson prosecution or a prosecution on related charges such as insurance
fraud, mail fraud, wire fraud and the like.
When an insurance company recognizes a potential arson-for-profit
claim, additional records will become part of the claim file. A forensic
accountant may be utilized to evaluate the financial condition of the
insured at the time of the fire and the existence of a financial motive.
The report of the forensic accountant will be in the claim file. Interviews
and recorded statements of various witnesses will be made part of
the claim file. Records from creditors, suppliers, vendors and others
will be compiled. Tax returns of the individual and/or business and
related tax filings will be contained in the claim file. Bank records
(including canceled checks and monthly statements), payroll records, records
of the purchase of the insured property, employee rosters, liens or judgments
recorded against the property, appraisals on the property (before or after
the fire), mortgage records and other loan documents, shipping / receiving
records and all other such documents will be found in the claim file in
If there is an issue about the adequacy of insurance coverage taken out
by the insured, there may be a report on "co-insurance"
which may limit the recovery of the insured when the property is found to
be deliberately under-insured to minimize the premium payment. Payment
histories from the mortgagee/lienholder and claim documents from the
mortgagee/lienholder will be part of the file. Initial payments provided
to the insured as an "advance" and any insurance settlement payments
to the insured can be found in the file.
Records from the building department and other agencies establishing
code violations, environmental violations, and other problems will
be documented and put in the claim file. Courthouse records of any criminal
or civil proceedings involving the insured or related parties will be
documented in the file. Records of other insurance claims by the
insured and related parties can be important information in the claim file.
The property insurance loss register (PILR) and other insurance industry
databases provide this information and it will be contained in the claim
file. Many states now allow insurance companies investigating a claim to
obtain records from other insurance companies who have previously handled
claims from the insured or previously provided coverage for the insured
property. Any such records directly obtained from other insurance companies
will be found in the claim file.
Where a request for information from the insurance company has been made
by an investigative agency under the applicable Arson Immunity Reporting
Act, it will be documented in the claim file. Any information obtained from
the investigating agency will usually be recorded in the claim file.
When an Examination Under Oath has been taken of the named insured
or others, the transcript and exhibits will be found in the claim file.
A summary and evaluation of the Examination Under Oath by the insurance
company or the attorney who conducted the examination will be contained
in the claim file. When the claim has been assigned to the Special Investigation
Unit (SIU) most of the investigative activities will have been conducted
by the SIU. There will be confidential reports on the results of the investigation
found in the claim file. When the insurance company is at the completion
of the investigation and must make a decision on coverage, there will be
reports summarizing the investigation and evaluating coverage issues. These
are sometimes submitted to a "claim committee" for a final decision
and contain a complete summary of a claim and its investigation. When a
decision is made to deny the claim, the formal letter of denial is
found in the claim file, together with any correspondence received from
the insured or its representatives / attorneys following denial of the claim.
While this list includes most of the items found in a claim file,
every claim file is unique. The particular facts and circumstances of
the claim will determine what is contained in the claim file. A claim file
is a voluminous file of material which can include hundreds of pages of
records and documents. The key to accessing this information is the applicable
Arson Immunity Reporting Act in the jurisdiction. The proper use of
a request under the Immunity Act will enable the investigator to obtain
all of this information. Most immunity acts do not catalog all of the information
which can be found in a claim file and usually contain only a limited number
of common documents such as the application, policy, premium payment records,
claim documents, prior claim records and claim payment records. However,
most Immunity Acts are intended to allow access to almost everything in
the claim file and the investigator must be aware of the full range of materials
which can be found in a claim file to be sure all relevant materials are
obtained and reviewed.
Reprinted with permission from the author.