Loss Adjustment Expense Law and Legal Definition

Loss adjustment expense refers to “the entire amount that an insurer has to spend in relation to adjustment, recording, and settlement of claims, other than the claim payment itself. It includes allocated loss adjustment expenses and unallocated loss adjustment expenses. Therefore, expenses identified by a claim file in the insurer’s records such as attorney’s fees, as well as operating expenses not identified by claim file, but functionally associated with settling losses, such as salaries of claims department are loss adjustment expenses.