See an audit-bearing decision

Facts of loss

A supply line beneath the kitchen sink failed suddenly, discharging water that damaged the cabinetry and flooring. The plumber's report attributes the loss to an abrupt rupture of the line, not long-term seepage.

Policy basis — citation

Form HO-3 · Section I — Perils Insured Against: "sudden and accidental discharge … from a plumbing system" is covered. Section I — Exclusions ¶A.3 (surface water) does not apply: the water originated inside the plumbing system.

Reasoning

Proximate cause is a sudden-and-accidental discharge from a plumbing system — a covered peril. The surface-water exclusion is inapplicable because the water did not originate as surface water. Coverage is triggered, subject to the policy's deductible and limits.

Evidence trail attached

• Policy form and endorsement versions referenced, with the covered-peril and exclusion language quoted verbatim
• Plumber's report and field photos cited as the factual basis for "sudden and accidental"
• The specific exclusion considered and ruled out, with the reason it does not apply
• Human review: routed to a licensed adjuster for confirmation before the coverage position is communicated

What was reviewed

A first-party auto claim, 31 days after proof of loss was submitted. The agent reviews the file's handling against the state's claims-settlement timeline — it is not adjudicating coverage.

Rule basis — citation

State Unfair Claims Settlement Practices Act / prompt-payment statute: the insurer must affirm or deny coverage within 30 days of receiving proof of loss, or issue a written explanation of the need for additional time.

Finding

At day 31 the file shows no coverage decision and no written delay notice on record. That is a prompt-payment timeline breach and a potential bad-faith exposure. The agent flags the file and lists the remediation step: issue the decision or a documented delay notice now.

Evidence trail attached

• Claim timeline reconstructed from the file, with the proof-of-loss date and the current date stamped
• The governing statute cited with its specific deadline
• The exact missing artifact identified — a coverage decision or a written delay notice
• Human review: routed to the adjuster and supervisor for action, not auto-closed

What was screened

A reported burglary with several high-value items claimed. The agent screens for documented fraud indicators and routes accordingly — it does not deny the claim or decide coverage.

Indicators on the record

Loss reported 23 days after the date of loss; high-value items claimed without receipts or proof of ownership; the claimed loss is materially inconsistent with the police report on file. Each indicator is a fact in the claim file.

Fairness basis

The referral is based only on claim-specific evidence. No protected characteristic — and no proxy for one — is used as an indicator, consistent with fraud-detection-fairness expectations and the NAIC AI Model Bulletin's governance duties.

Evidence trail attached

• Each indicator tied to the specific record item it came from
• An explicit note that no protected-class data or proxy informed the flag
• The decision recorded as a referral for investigation — coverage and payment are unaffected by the flag itself
• Human review: routed to a Special Investigations Unit investigator to pick up

The rule the agent can't break

Never draft a denial without a specific policy citation. If no governing provision is on the record, the agent cannot produce a denial.

Facts of loss

Heavy rainfall; water entered the dwelling at grade through the garage. The field inspection found no plumbing failure or sudden-and-accidental discharge.

Policy basis — citation

Form HO-3 · Section I — Exclusions · ¶A.3 (Water Damage): "surface water … whether or not driven by wind" is excluded; no covered ensuing loss applies.

Reasoning

Proximate cause of loss is surface water entering the structure — an excluded peril under ¶A.3. No covered ensuing cause (e.g., a resulting fire or sudden internal water discharge) appears on the record, so coverage is not triggered.

Evidence trail attached

• Policy form and endorsement versions referenced, with the exclusion language quoted verbatim
• Adjuster field notes and weather data cited as the factual basis for "surface water"
• Fair-claims-handling check: denial issued within the state's prompt-payment window, with the disclosure language the state's unfair-claims-practices rules require
• Human review: routed to a licensed adjuster for sign-off before the denial is issued