What does the term ‘loss adjustment’ specifically refer to?

The term ‘loss adjustment’ specifically refers to the evaluation and negotiation of claims costs. This process occurs after a claim has been reported and involves assessing the extent of the loss, determining the appropriate compensation, and negotiating between the insurer and the insured or relevant parties. Loss adjustment is crucial for ensuring that claims are settled fairly and accurately based on the terms of the insurance policy and the evidence of the loss.

The focus of loss adjustment is on the claims process, primarily dealing with how much the insurer should pay the policyholder when a loss has occurred. This involves a thorough investigation of the circumstances surrounding the claim, like evaluating the damage, consulting with experts, and sometimes negotiating with service providers or other stakeholders involved in the claim.

In contrast, the assessment of risks before issuing a policy pertains to underwriting, not loss adjustment. The prevention of insurance fraud involves measures to detect and prevent fraudulent claims, which is a separate function from loss adjustment itself. Finally, the cancellation of ineffective policies relates to the termination of insurance coverage and does not involve the adjustment or negotiation of claims once a loss has been reported. Thus, the focus on evaluating and negotiating claims costs correctly defines loss adjustment.