Claims Handling Guidelines

These guidelines establish the minimum standards for handling all claims on OpenInsure-administered programs. All claims personnel and third-party administrators (TPAs) operating under our authority must comply with these procedures. Exceptions require written approval from the Claims Director.

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1. First Notice of Loss (FNOL)

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1.1 Receipt Channels

Claims may be reported through: All FNOL sources feed into the claims queue. Duplicate FNOLs (same loss, multiple channels) are merged automatically; manual review confirms merge within 2 hours.

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1.2 FNOL Acknowledgment SLAs

State insurance regulations specify maximum timeframes for acknowledgment and investigation. Our internal standards are more stringent:

Caution: Failure to acknowledge a claim within the statutory period triggers regulatory violations and potential bad-faith exposure. The system will flag any unacknowledged claims approaching the statutory deadline in red.

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1.3 Initial FNOL Data Collection

The FNOL handler must collect and enter into the claims system within 4 hours of receipt:

1. Policy identification — policy number, named insured, effective dates (confirm policy was in force on date of loss) 2. Date of loss — exact date and time if known 3. Location of loss — address where loss occurred 4. Description of loss — brief narrative (≥ 3 sentences); type of loss (property, liability, auto, WC) 5. Claimants — names, contact information, and relationship to insured 6. Injuries — any bodily injury reported; note whether medical treatment has been sought 7. Witnesses — names and contact information if available 8. Police/fire report — number and agency if applicable 9. Photographs — ask claimant to preserve and submit any available photos 10. Insured contact — confirm producer is notified of the claim

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1.4 Coverage Verification

Before proceeding to investigation, confirm:

• Policy was in force on the date of loss
• Claim type is covered under the policy (GL, WC, auto, etc.)
• No applicable exclusions are facially obvious from the FNOL description
• Claimant has standing to make the claim against the insured

If coverage questions exist, open a coverage review task and notify the supervising adjuster within 24 hours.

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2. Investigation Standards

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2.1 Investigation Timelines

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2.2 Investigation Standards by Claim Type

Property Damage Required investigation steps:

1. Inspect or arrange inspection of damaged property within the timeframe above
2. Obtain a written or recorded statement from the named insured
3. Photograph all damage (exterior, interior, close-up of specific damage points)
4. Engage a licensed contractor or independent adjuster for repair estimate on losses > $15,000
5. Confirm cause of loss (single occurrence vs. repeated seepage/wear)
6. Obtain pricing for actual cash value (ACV) vs. replacement cost value (RCV) per policy terms
7. Document any pre-existing conditions that may affect the claim

General Liability — Bodily Injury Required investigation steps:

1. Obtain a recorded statement from the named insured within 2 business days
2. Obtain recorded statements from all witnesses
3. Attempt to obtain a recorded statement from the claimant (advise of right to have counsel present)
4. Inspect the loss location and photograph
5. Obtain any surveillance footage, incident reports, and safety records
6. Obtain medical authorizations from injured parties
7. Gather medical records, billing records, and lost wages documentation
8. Evaluate liability (negligence, comparative fault, assumption of risk)

Workers’ Compensation Required investigation steps:

1. Contact the injured worker within 24 hours of FNOL
2. Contact the employer’s designated contact within 24 hours
3. Confirm the injury arose out of and in the course of employment
4. Obtain the employer’s accident/incident report
5. Direct the injured worker to a panel physician (if state permits employer to direct medical care)
6. Obtain medical authorizations and records
7. Calculate the wage rate for temporary total disability (TTD) purposes
8. Evaluate return-to-work opportunities (modified duty, light duty)
9. Confirm state reporting requirements (most states require employer’s first report within 10 days)

Commercial Auto Required investigation steps:

1. Obtain police report
2. Inspect all vehicles involved (or obtain independent appraiser’s report)
3. Obtain recorded statements from all drivers
4. Obtain MVR for insured’s driver
5. Confirm driver was listed on the policy or meets omnibus clause
6. Photograph vehicle damage and accident scene
7. Obtain medical records for any bodily injury claimants
8. Evaluate comparative fault if applicable

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2.3 Recorded Statements

Recorded statements are a cornerstone of investigation. Best practices:

• Obtain consent before recording (required in all states)
• Identify all parties at the outset: date, time, adjuster name, claimant name
• Ask open-ended questions; allow the claimant to narrate before asking specifics
• Cover: date/time/location of loss, how the loss occurred, injuries, medical treatment, employment impact
• Retain recordings per records retention schedule (minimum 7 years from claim closure)

Tip: Never make coverage representations during a recorded statement. If the claimant or insured asks about coverage, state that coverage is being reviewed and you will follow up in writing.

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3. Reserve Adequacy Standards

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3.1 Reserve Philosophy

Reserves must represent the best estimate of the ultimate cost to resolve the claim, including all indemnity, medical, allocated loss adjustment expenses (ALAE), and anticipated legal fees. Reserves are not optimistic targets — they are actuarially sound estimates.

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3.2 Initial Reserve Deadlines

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3.3 Reserve Adequacy Reviews

Reserves must be reviewed and updated at the following intervals:

• Every 30 days for open claims with indemnity > $25,000
• Every 90 days for all other open claims
• Immediately upon any material development (new medical information, liability determination, coverage change)
• Upon each anniversary of the loss date for long-tail claims

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3.4 Reserve Authority Matrix

Any reserve increase of more than 25% of the prior reserve requires approval at the next authority level above.

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4. Coverage Determination Procedures

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4.1 Coverage Analysis Steps

1. Confirm the policy was in force on the date of loss (effective and expiration dates) 2. Identify the applicable insuring agreement(s) 3. Review all applicable exclusions; consult legal if interpretation is disputed 4. Determine whether any conditions precedent have been met (timely notice, cooperation) 5. Identify any other potentially applicable policies (other insurance clause) 6. Document your coverage position in the claim file 7. Issue a coverage determination letter or Reservation of Rights within the required timeframe

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4.2 Reservation of Rights

A Reservation of Rights (ROR) letter must be issued when:

• Coverage questions exist that could result in partial or full denial
• The insured has potentially violated a policy condition (late notice, failure to cooperate)
• The claim involves any excluded coverage that may overlap with covered allegations
• Litigation is filed before a coverage determination is made

ROR letter requirements:

• Must be issued within 15 days of identifying a coverage question (or statutory timeframe if shorter)
• Must specifically identify the policy provisions in question with quotes
• Must state the insurer is defending under a reservation without waiving coverage defenses
• Must be sent by certified mail to the named insured and cc’d to the producer
• Must be reviewed by coverage counsel if amount in dispute exceeds $50,000

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4.3 Coverage Denials

1. Draft the denial letter with specific citation to applicable exclusion(s) or condition(s)
2. Have the denial reviewed by Claims Manager before issuance
3. For denials > $25,000 in dispute, obtain coverage counsel review
4. Issue denial by certified mail with return receipt requested
5. Document all communications in the claim file
6. Notify the producer simultaneously

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5. Settlement Authority Matrix

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5.1 Settlement Authority by Amount

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5.2 Settlement Documentation Requirements

All settlements must include:

• Release of all claims — executed by claimant and any guardian if claimant is a minor or incapacitated
• Settlement memorandum — summarizing claim history, liability evaluation, damages, and settlement rationale
• Payment authorization — dual-control authorization per §6 below
• Subrogation analysis — per §7 before finalizing payment

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5.3 Minor / Incompetent Claimants

Settlements involving minors or legally incompetent individuals require court approval in most states. Do not settle and do not issue payment for a minor’s claim without:

• Confirmation from coverage counsel of the court approval requirement for the applicable state
• Court order approving the settlement (if required)
• Guardian’s signature on the release

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6. Payment Procedures and Dual Control

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6.1 Payment Authorization

All claim payments require dual-control authorization:

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6.2 Payment Methods

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6.3 Statutory Payment Deadlines

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7. Subrogation Evaluation

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7.1 Subrogation Review Triggers

Evaluate subrogation potential on every claim. Subrogation is particularly promising when:

• A third party caused or contributed to the loss (negligent driver, product failure, contractor error)
• A warranty or indemnity agreement exists that may shift the loss
• A co-defendant’s insurer has deeper fault than our insured
• A workers’ compensation claim involves a third-party tortfeasor

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7.2 Subrogation Evaluation Process

1. Document potential subrogation target in the claim file at FNOL or upon identification
2. Preserve evidence (photographs, incident reports, maintenance records) before it is destroyed
3. Obtain a signed subrogation agreement from the insured at time of settlement
4. Refer claims with subrogation potential > $10,000 to the subrogation unit within 30 days of payment
5. Monitor statute of limitations — most states allow 3–6 years for property subrogation, 2–3 years for bodily injury
6. File suit if recovery is not achieved through demand within the timeframe preserving the statute

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7.3 Statute of Limitations Monitoring

Every claim with subrogation potential must have a SOL diary date entered in the claims system. The system sends alerts at:

• 12 months before SOL expiration
• 6 months before
• 3 months before (escalate to subrogation counsel)
• 60 days before (file suit or obtain tolling agreement)

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8. Litigation Management

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8.1 Litigation Protocol

1. Upon service of a complaint on the insured, the insured must notify the MGA within 5 business days (contractual obligation; late notice may constitute a policy condition violation) 2. Assign litigation to approved panel counsel within 2 business days of receiving service papers 3. Notify the carrier within the timeframe specified in the program agreement 4. Set a litigation reserve within 1 business day (see §3.4 for authority matrix) 5. Issue Reservation of Rights if not already in place and coverage questions exist 6. Schedule litigation strategy call with defense counsel within 10 business days

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8.2 Defense Counsel Selection

All defense counsel must be on the approved panel maintained by the Claims Director. Selection criteria:

• Experience in the applicable jurisdiction and claim type
• AV-rated by Martindale-Hubbell or equivalent
• Annual billing rate agreement on file
• No conflicts of interest with insured or claimant

For coverage disputes, coverage counsel must be separate from defense counsel.

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8.3 Litigation Supervision Requirements

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9. SIU Referral Triggers

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9.1 Special Investigations Unit (SIU) Referral Criteria

Refer to the SIU when any of the following indicators are present:

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Policy-Related Red Flags

• Coverage bound very close to loss date (< 30 days)
• Policy recently increased before loss
• Prior claims for same or similar loss at prior carriers
• Insured has difficulty describing their business or operations

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Claimant Red Flags

• Inconsistent descriptions of how the loss occurred
• No independent witnesses despite alleged public location
• Claimant has counsel retained before FNOL
• Claimant or insured has prior fraud conviction

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Medical Red Flags

• Treatment inconsistent with mechanism of injury
• Claimant treats exclusively with provider linked to prior fraud rings
• Unusual gap in treatment after initial visit
• Bills for services not consistent with injury type

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Property Red Flags

• Property recently purchased or recently insured
• Loss occurs immediately before policy expiration
• Insured has prior losses of same type at different locations
• Documentation provided is inconsistent or appears altered

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9.2 SIU Referral Process

1. Document all fraud indicators in the claim file 2. Do not confront the claimant or insured before SIU involvement 3. Submit SIU referral form through the claims system: Claim → Refer to SIU 4. SIU acknowledges within 24 business hours 5. Do not deny, settle, or close the claim without SIU clearance once referred 6. SIU coordinates with law enforcement and state fraud bureau as appropriate

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10. Regulatory Filing Requirements

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10.1 Large Loss Reporting

Notify the carrier and file with the applicable reinsurance facilities when:

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10.2 Statutory Reporting Requirements

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These guidelines are effective January 1, 2026. Claims handling standards are reviewed annually by the Claims Director. Questions should be directed to claims@openinsure.dev.