When your business is rocked by a property loss, it’s easy to get lost in the technical details of the claims process. However, there are several keys to effectively managing the claims process and getting the results you desire, says Paula Devaney, director of claims services with ECBM Insurance Brokers and Consultants.
“Engage the appropriate professionals, maintain clear communication with your insurance carrier and utilize the services of your insurance agent to maximize the benefits under your policy,” says Devaney. “It’s important for your agent to review your coverage and your losses, because he or she is trying to find every aspect of the policy that is going to apply. The agent also evaluates the loss against other insurance coverage you may have, in case those other coverages are impacted.”
Smart Business spoke with Devaney about how to manage the claims process after a loss.
How should businesses handle claims after a property loss?
First, report the claim immediately. It is not normally prudent to wait for more information to become available to report the claim. Engage the assistance of your insurance agent in reporting the claim, because the agent has the ability to notify the insurance carrier in the best light possible for the business. The insurance agent is responsible for analyzing the coverage at the outset, so that when you report the claim, all bases are covered.
In addition to reporting the claim immediately, it is necessary to make sure that the appropriate steps are taken to protect the property from further damage. That runs the gamut from requesting assistance from the agent to engaging remediation contractors or any appropriate professionals that might be necessary to help protect the property from further damage. If the property loss involves a building fire or water damage, you need to bring in a reputable general contractor or construction manager as quickly as possible to start assessing the damages.
What can businesses do to ensure they are prepared before a loss happens?
Any insured that takes the time to do a review or some disaster planning has a head start. Start to put together a list of vendors and contractors you can call upon immediately in the event of a loss. Beyond that, you should add service providers to that list. Also, have the information readily available offsite, so it’s not buried in an office that just burned down or flooded.
You should have the businesses that are essential to your operations conveniently maintained in a directory so you can call them immediately to let them know what’s happened and seek out whatever assistance is necessary. If a water damage claim wipes out all your business’s stationery and you have your stationery supplier’s information set aside, you are able to contact that vendor and get new stationery printed immediately.
You’re already under the gun. You don’t want to spend time trying to find that information. You want to get your business back up and running as quickly as you possibly can.
What are some common mistakes businesses make during this process, and how can they be avoided?
One of the mistakes I’ve seen happen is that, rather than engaging a general contractor, an insured goes out and gets an electrician, a plumber, a drywall contractor, etc. Then you’re trying to submit 15 estimates to the insurance carrier for consideration.
The easier way to handle this is to immediately engage a contractor with whom you have a working relationship. If you don’t have one, seek out references through your insurance agent. Then, get them out there to start to put together an initial assessment of the damages.
How should a business deal with the insurance company during a claim?
Because the insured knows the money is coming from the insurance company, it tends to rely very heavily on the insurance company. That’s not necessarily a mistake, but you, as an insured, are the one who knows your business best. You know what it’s going to take to put the business back together.
From the outset of a loss, to some extent, you have to think insurance doesn’t exist and do whatever is absolutely necessary. You have to keep the insurance carrier closely involved in what you’re doing, but what you don’t want is the insurance carrier calling all the shots.
Many companies sit back and wait for the insurance carrier to give them a number or give them the go-ahead to make repairs, and that’s a mistake. You have to view it as a partnership. You know your business; get your professionals out there. Let them put together the damages.
At the same time, make sure you’re talking to the professionals the insurance company has brought in. If you keep those lines of communication open throughout the entire claims process, you’re going to end up with a better result.
As soon as the initial assessment of damages is completed, ask the insurance company for money. Obviously, a property loss is not planned, so operationally, it can have a significant impact on budgeting. So you want to ask for an advance on the loss, and utilize your agent to help you do that. Insurance companies, for the most part, are going to give you seed money. If they don’t do it, it’s wrong. They should be funding the loss up to the point that the loss is completely resolved.
Also, it is better to have one particular point person with the insurance carrier. If that person is the one with the knowledge from the beginning through the end of the loss, then you don’t have competing information. It makes it easier for everyone.
Paula Devaney is director of claims services for ECBM Insurance Brokers and Consultants. Reach her at (610) 668-7100 or [email protected]