Insurance: The Related Concepts of Claims, Claims Adjustment, Claims Adjusting, Claims Settlement, Claims Settlement Process  & Settling Claims

Sean Quinn, Ph.D, J.D., Etc.
Exposition Blvd  #115
Texas 78703

As a conceptual matter all adjustment must be viewed as part of a settlement practice. The term “settlement” in the context of litigation pertains to the resolution of a dispute by negotiation and/or agreement, without proceeding to final judgment, unless by agreement. The word can also mean something like this in the context in the context of transaction conflicts.

The meaning of the term “settlement” in the context of insurance adjustment covers virtually the whole process. This is because the entire process is working toward a resolution of a contract and money matter. There is nothing that is part of the process that is not part of the settlement process. The mere fact that a claim is not likely to settle does not make the process any less a process of trying to settle and therefore a settlement process.

These two separate meanings should be distinguished at all times and never confused, except when they are both being satisfied at once, a rarity since there is a good deal more “power v. weakness” characteristics in the litigation settlement process than is permitted in adjustment. Litigation is not as just as a correct adjustment process. 

The theses here in are nicely structured by at least one section in a clause in one of the most highly used models for formulating statutory insurance bad faith.  Portions the model act are to be found in the Texas Insurance Code. Section 541.060, entitled “Unfair Settlement Practices” a bricolage of requirements.  To be sure, what is often taken to be the essence of settlements is to be found there in section (a)(2) but so is a prohibition misrepresentations (a)(1), failure to provide an insured a reasonable investigation (a)(7), and more.  These idea make adjustment settlement broader than simply settlement as understood in litigation. 

Settlement is not part of the essence of litigation; it is simply something that happens more often that not.  Settlement regarding insurance claims is part of the essence of the insurer-insured relationship.