Loss adjustment is the investigation and settlement of an insurance claim. After a policyholder reports a loss, an adjuster establishes what happened, checks that the event falls within the terms of the policy and is not excluded, measures the damage or liability, and negotiates the settlement. It is a core part of claims administration.
Adjusters are of three kinds. Staff adjusters are employees of the insurer. Independent adjusters, called loss adjusters in the United Kingdom, are specialist firms engaged by insurers, often for large, complex or remote losses and after catastrophes. Public adjusters, called loss assessors in the United Kingdom, act for the policyholder in presenting the claim. The costs of the process are the insurer's loss adjustment expense and are reserved for alongside the claims themselves. After paying, the insurer may pursue a third party responsible for the loss under its subrogation rights.