The Real Poop
Need to brush up a bit before you dive into the world of insurance? Take a peek at our Finance Learning Guides to make sure your knowledge is up to snuff.
You're minding your own business, puttering along the road in your ancient Datsun when, out of nowhere, an SUV plows into your vehicle. Thankfully, you're unhurt. The backside of your car, however, looks like a crumpled-up tin can.
Enter the insurance claims adjuster. Insurance companies employ claims adjusters to:
- Examine damaged property
- Gather information about the claim on the property by playing "Twenty Questions" with the claimant, witnesses, and any expert whose opinion might be relevant to the claim
- Take photos and/or video of the damaged property
- Pull all of this information together into a report
- Pass that report along to a claims examiner
- Wait for the claims examiner to come to a decision about the claim
- Take the claim examiner's decision back to the claimant and either settle (yay!) or prepare to be a legal beagle if the claimant wants mo' money (boo!)
Now, you're probably thinking, "That all sounds lovely, but what's this insurance thing you speak of?" So glad you asked.
Shizzle happens. This is why, prior to anything going horribly, terribly wrong, people buy policies from insurance companies. These policies allow the insured to hedge against potential losses. You can buy a policy for pretty much anything that would leave you or your loved ones floundering in a financial hole if you lost it, including your house, your car, your health, or your life.
There are varying degrees of insurance you can purchase. For example, when you own a vehicle, you're required by law to buy liability insurance, which kicks in when someone sues you because you, say, ran over them with your car. However, you could also buy collision insurance for your vehicle, as well as comprehensive and uninsured motorist insurance.
Okay, you've bought a policy. Now what? Every month, you pay a premium to the insurance company. This premium varies depending on your deductible, aka the amount of money you're willing to put toward repairing your vehicle before the insurance company steps in with any money. If you have a high deductible, your monthly premiums will be low; if you have a low deductible, your monthly premiums will be high.
And where does the money the insurance company pays out come from? Well, the insurer takes the premium you pay in every month and invests it. If you ever make a claim against your insurance, and the claim is covered by your policy, then the insurance company uses the money you paid in to compensate you.
At this point, you might be convinced that no person in their right mind would purposely embark on a career as an insurance claims adjuster, and you’d be right. This is a job where college graduates who can't find work go to die. But just because claims adjustment sounds about as exciting as a glass of warm milk doesn’t mean claims adjusters are unskilled morons.
As previously mentioned, insurance companies like to hire claims adjusters with degrees in fields like business, accounting, engineering, or pre-law. Employers also expect you to have stellar interpersonal and communications skills—you’re going to be gathering information from a lot of people, including claimants who are 50 shades of furious because their car got dinged or their house blew up in a freak grilling accident. You'll also need to be good at analysis: Your job will require you to consider many different pieces of information in order to determine if a claim is covered by an insurance policy and how much the claimant is owed.
But there's one other thing a claims adjuster must be good at in order to succeed in this career. Prepare to be terrified. To make it as a claims adjuster, you need to be good at math.
Say you're a claims adjuster, and you've been assigned to assess the damage on a car that was bumped in a parking garage by another car. There's a dent and some paint missing, and that's pretty much it. First off, you've got to decide how much it'll cost to fix the damage—go with a nice, round $500. Now, say the claimant has a $0 deductible on their insurance policy; you'll need to pay out $500 bucks. But what if the claimant has a $1000 deductible? Then you don't have to pay out jack.
Okay, so maybe the math claims adjusters do on a regular basis isn't terribly difficult, but what about the other problematic aspects of this job? See, claims adjusters occupy a difficult position. On one side, you have the insurance company—your employer—whose interests you're supposed to serve. And what is your employer interested in? Profits! And keeping as much of the money customers have paid in as possible!
On the other side, you have customers who have given up thousands of dollars over the years so that, if they ever lost everything, they'd be able to collect the money they socked away with the insurance company and start anew. These claimants are going to be very, very, very angry if they don’t get the payout they feel they've paid for, and they're going to take their rage out on you, the claims adjuster handling their case.
So, you have to balance what your employer wants against what the insured feels entitled to—that's stress-inducing right there. You'll also be working an irregular schedule with long hours; you'll be evaluating property damage when it's convenient for the claimant, and that may be early in the morning, at night, or during the weekend. You may be assigned to travel to the site of a natural disaster, where you'll spend weeks or even months doing assessments. You'll have the added bonus of seeing people brought low by circumstance; you'll get to experience their grief, despair, fury, and frustration firsthand. Sounds like a good time, right?
Then, there's the added bonus of getting to wade through red tape every single day of your career. Insurance companies are heavily regulated under federal and state law, because there's a long and fabled history of "insurers" who have collected money from customers and then disappeared into the night, never to be seen again. Some claimants, too, have a distressing tendency to "off" themselves in an effort to collect on their insurance and live out their days on a sunny Caribbean beach.
Of course, not everything about this career is terrible. The pay is decent—most claims adjusters earn between $50k and $70k a year—and benefits include insurance and retirement if you work for a large, well-established insurance company. You'll also be a truly valued employee—the more experience and knowledge you accrue in the course of adjusting claims, the more important you'll be as a resource. There's also a clearly delineated corporate ladder for you to climb, or, if you want, you can always take off and start your own claims adjustment company.