Top 10 Tips for Submitting a Claim
Napa residents and businesses were awakened early Sunday morning to the ground swells of a strong 6.0 earthquake. Buildings crumbled, glass shattered, gas and water lines ruptured, and other destruction ensued.
Now begins the unfortunate task of completing the repairs and, in many situations, preparing an insurance claim.
Below is a top 10 list of items to consider when faced with an impending claim:
1. Read your insurance policy.
Understand what types of losses are covered (earthquake damage, fire damage, water damage), what is insured (building, equipment, stock and supplies, business interruption, extra expenses), what deductibles apply, and whether there are any coverage limits that might apply?
2. Assemble a claims team.
All areas of your business may be affected and you should get the details from all facets of your operations. Impact to building and equipment, operations, sales, finance, and logistics should all be considered when trying to understand how your business has been affected.
3. Establish procedures to capture expenses.
Develop charge codes, purchase orders, or accounts to capture all claim-related expenses.
4. Designate a single point of contact.
Information about a loss has a tendency to change as more facts are known. Having a single point of contact providing information to insurers can avoid confusion about the details of your loss.
5. Manage expectations.
Keep management apprised about the details of the loss such as claim estimates, and timeframe to rebuild/restore operations as well as details regarding the claims process including the amount of time and effort that is required to adequately document and support a claim.
Be cautious of loss estimates and recovery timeframes that are too low or overly optimistic, which can result in a false sense of security and mismanage expectations internally and externally.
6. Prepare for meetings.
Coordinate your claim team in advance of insurer meetings to set the agenda, assemble supporting documentation, and ensure that the right people are present to answer questions that might arise.
7. Explain your business model.
Don’t assume that others have a thorough understanding of your business. Explain your business model so that the adjuster and his/her team will have better context around the measurement of the loss.
8. Help the insurance adjuster set the loss reserve.
Explain the areas of loss and provide sufficient information to allow the adjuster to set an appropriate loss reserve. Setting a reserve that is too low or too high can cause issues down the road.
9. Document substantive discussions with insurers.
Confirm discussions or verbal agreements in writing to maintain a record of the loss.
10. Request a cash advance.
Once the magnitude of the loss is determined, request an advance from the insurance company to offset expenditures you already incurred. Obtain additional cash advances as claim items are agreed to. This will limit the amount of open claim items at the end of the process.
Read all of Allen Melton’s Risk Insider contributions.