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Preparing For And Responding To A Large Property Loss – Insurance Laws and Products

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Often, the last thing a company wants to address immediately
following a large property loss is an insurance claim. However, the
claims preparation process is vital to ensuring that a business
survives a large property loss. Throughout my career of measuring
and preparing large property losses for insureds, I have learned
many lessons to ensure the claims process goes smoothly and
efficiently. Below, I outline six critical steps to take prior to
and following a loss to increase the chances of a favorable claims

Prior to a loss:

  • Ensure your reported values are accurate

To place insurance, each year a company reports the annual
values of the property, inventory and business interruption risk to
insurers. Inaccurate values can lead to several difficult outcomes,
including co-insurance penalties, insufficient limits of insurance
or inaccurate deductibles.

  • Assemble your claim team prior to a loss

Internally, identify key personnel from risk management,
facilities, operations, sales, accounting, insurance broker, etc.
Externally, take the opportunity to interview, vet and contract
with vendor partners including restoration companies, claim
preparation firms and coverage counsel. Following a wide-spread
event, these resources quickly become fully utilized and having
relationships in place will result in prioritized response and

  • Fully read and understand the policy language

Work with your insurance broker to understand the policy,
coverage and any potential areas of concern. Once a loss has
occurred, it is not the time to learn what coverage you have (or
don’t have).

Following a loss:

  • Communicate externally and internally

Early on, it is important to provide insurers with a preliminary
estimate of total loss so that the insurance reserve can be
properly set. This will develop into a well-documented insurance
claim submission and be shared with insurers. It is equally
important to identify potential recovery issues with internal
management, including insurance sublimits, deductibles or potential
policy coverage issues.

  • Make decisions in a timely manner

Often after a catastrophic event, the insured may decide to make
changes to the building or operations while rebuilding. While most
understand the increased cost of upgrading will not be covered by
insurance, it is important to also highlight that any extension to
the restoration period will be excluded from a business
interruption recovery. Of course, the insured may opt to make the
change or investment regardless but should understand the
implications to their insurance recovery.

  • Establish a claim preparation timeline and communication

Following a loss, it is important to keep regularly scheduled
meetings with the team (risk, operations, finance, claim preparer,
etc.) and the insurance company’s representatives (adjuster,
equipment or building consultants, claim auditor, etc.). Develop
communication protocols and assign a point person for such
communications. This ensures timely communication and discussion of
key decisions and issues. It also keeps the insurance adjustment
team focused on your claim, which may be one of many following a
wide-spread event.

By following these steps, a business will be in position to
maximize insurance recovery in a timely manner, allowing it to get
back to running its business.

Originally published by Public Risk Management

The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.

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