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Scenario

A homeowner calls their insurance company to report water damage inside the home following a storm. During the conversation, the insured explains:

“My basement flooded during the storm.”

The automated claims system recognizes the word “flooded” and begins evaluating the claim under flood-related exclusions within the homeowner’s policy.

However, as the conversation continues, the caller provides additional details. The insured explains that strong winds damaged part of the roof and rainwater entered the structure through the damaged area, eventually reaching the basement.

The policyholder used the word “flooded” to describe the extent of the damage but may not be referring to flood conditions as defined by the policy.

Stress Test Question

How should an automated claims system interpret loss descriptions when policyholders use general or inaccurate terminology?

Possible considerations include:

• the insured may use everyday language that differs from policy definitions

• the word “flood” may be used informally to describe any large amount of water

• the actual cause of loss may involve a covered peril such as wind-driven rain

Determining the true cause of loss requires evaluating the circumstances rather than relying solely on specific keywords.

AI Decision Risk

Automated claim systems that rely heavily on keyword recognition may misclassify the loss based on the policyholder’s initial wording.

For example, the system may:

• categorize the loss as flood damage

• apply flood exclusions under the homeowner policy

• deny the claim without fully evaluating how the water entered the structure

This can lead to incorrect claim decisions when the policyholder’s description does not align with policy definitions.

Human Claims Insight

Claims professionals understand that policyholders often use everyday language when describing damage. Adjusters typically ask clarifying questions to determine the actual cause of loss.

For example, an adjuster may ask:

• “Did the water come from outside the home or through the roof?”

• “Was there visible damage to the roof or exterior structure?”

• “Did water rise from the ground or enter from above?”

These questions help identify the true cause of loss rather than relying on the caller’s initial description.

Escalation Triggers

Automated claim systems may need to request clarification or escalate the interaction when:

• loss descriptions contain ambiguous or conflicting terms

• the caller uses terminology associated with excluded perils

• additional details suggest a different cause of loss

• the system cannot clearly determine how the damage occurred

Clarification may be necessary before applying policy exclusions.

Suggested System Response

When potentially misleading terminology is detected, the automated system may respond with language such as:

“I want to make sure I understand exactly how the water entered the home. Could you tell me whether the water came from outside the building or through damage to the roof or walls?”

This approach encourages clarification before the claim is categorized.

Stress Test Outcome

Policyholders frequently describe losses using informal language that does not align with technical policy definitions. Automated claim systems that rely heavily on keywords may misinterpret these descriptions.

Asking clarifying questions or escalating the interaction can help ensure that the cause of loss is evaluated accurately.