8 keys to navigating commercial property claims
Effective preparation and prompt action are critical as the Atlantic hurricane season begins.
With the U.S. Atlantic Hurricane season on the horizon, risk managers with properties and critical suppliers or customers from the Gulf all the way north into the New England coastal areas need to make sure their firms are fully prepared well in advance of any potential event. Here are eight keys to prepare for and manage large property and business interruption claims.
1. Know your policy
Pay close attention to policy wording, especially specific coverages provided for physical damage and business interruption, as well as what is excluded or potentially not adequately covered, including peril-related restrictions or sublimits. In your review, don’t overlook your deductibles. The method used to calculate the deductible can significantly impact your recovery or even sink your claim altogether.
2. Manage expectations
Keep C-level executives informed about your coverage and resiliency measures, as well as realistic about outcomes and recovery. Be sure to provide advance notice to colleagues who will need to provide data, documentation and follow-up information about any storm-related loss and affected operations. Keep consultants and outside experts your firm engages informed about your goals, so they can assist with strategizing. This is also the time to establish ground rules for insurer onsite visits, points of contact, information flow and other claim management protocols.
3. Build your claims team and keep them focused
Hurricane-related claims are often complex and require timely responses, effective coordination and sound management. Your insurers will likely have a team of specialists ready to represent their interests on coverage questions, engineering issues and loss quantification — and you will need to have one in place as well. If you don’t engage outside help (and many policies include coverage for a portion or all such costs), you will still need the assistance of colleagues to prepare documentation and provide supporting material. Make sure they understand their assistance will be required on an ongoing basis until the claim settles. Every member of your team needs to know their role.
4. Recognize the value of effective documentation
Insurers will require validation that any claimed amounts are reasonable and based on factual evidence. For instance, your organization may have spent $100,000 on repairs, but if you can’t produce the invoices or inventory requisitions, you may not recover that money. So, make sure your team has ready access to all required documentation and backup regardless of how a storm event might affect your facilities and information technology.
5. Know your number
Some components of a claim may be clear-cut and quickly accepted by an insurer while other aspects may be subject to negotiation. Insurance policies are not all created equal. They may be more or less responsive to the specific circumstances of your claim, or the wording may be vague with respect to a particular issue related to a loss event. Ultimately, almost every claim settlement involves some degree of negotiation. So, it’s helpful to know from the start of any discussions the dollar amount your organization is willing to accept to settle a claim.
6. Take charge
On a large or complex property claim, the risk manager or individual acting in that capacity should oversee all advance planning and preparation, as well as the management of the claim. A large claim generally is an uncommon event for internal team members who will be required to provide required documentation and backup. The extra work involved may fall outside their normal reporting channels and place additional demand on their time and energy. Thus, it’s important to take steps to ensure that any colleagues tapped to participate in the claim process know their responsibilities in advance so they will be prepared to do their part when a claim occurs.
7. Communicate
Once you have a chance to assess the loss and establish a plan with clear objectives, share them with your leadership and all team members participating in the claim process. Besides helping to ensure everyone is working collaboratively, it decreases the chances of the process falling off track or being hijacked by someone — inside or outside the organization — with a different agenda.
8. Assert your authority
Remember, when you have a claim, it’s your claim — not the insurance company’s claim or your outside expert’s claim. As leader of the claims management process, you ultimately determine what to claim, how to present it, and set the scope of any settlement discussions. Use the opportunity to set the terms — and the tone — of the claim process.
By planning effectively prior to any major property loss event and promptly taking control of the claim process when a loss occurs, you can avoid costly delays in the adjustment or related inaccuracies. You’ll also put your organization in the best position to obtain timely and complete insurance recoveries, even under these challenging circumstances.
Jacques Talbot, CFE, is associate director, Claims Preparation, Advocacy, and Valuations, Global Risk Consulting, Commercial Risk Solutions, Aon. He can be reached at jacques.talbot@aon.com.
Read more: