If there is legal claim against your business, you must contend with the party filing the claim and, perhaps unexpectantly, your insurance adjustor and carrier. But there are steps that your business can take to preserve its insurance law rights.
The insured is responsible for reporting, reconstruction response and the documentation and presentation of a claim against a commercial insurance policy.
The insurance adjustor will investigate the loss, recommend reserves and measure and settle the loss. Adjustors should inspect damage, attempt to quantify the loss, evaluate loss coverage and, if they find coverage, measure, and settle the loss.
The insurance broker will help the business report the loss, coordinate its management, serve as the conduit to the adjuster, assist with claim development and present and negotiate a settlement.
Before the loss
Become familiar with your adjustor and their consultants. A pre-loss meeting with these individuals and a broker can help you learn information on exposures, account details, inspection coordination and how communication should occur.
Next, review coverage with your account manager and the insurance broker or property claim consultant. Resolve coverage questions.
Obtain financial records, employee and client information, inventory records, appraisals, building plans and other important information. Keep these documents in a fireproof location or in safe off-site storage.
Identify key contact people in management, sales, operations, accounting, finance, warehousing, and risk management. This is helpful for prompt and effective contact with the adjustor and broker.
Finally, anticipate possible losses. These include the business units at risk, their response during an event and their fast and efficient resumption of operations.
These actions are important:
- Report the claim to your insurer and broker immediately.
- Restore fire protection by replacing damaged sprinkler heads, arranging fire watches, and recharging extinguishers.
- Prevent further damage. This is typically an insurance requirement.
- Conduct an inspection to separate damaged and undamaged property. Obtain quotes and invoices for replacements and repairs. Inventory the property and record its description, manufacturer, cleaning or repair costs, purchase price, replacement costs and any lead times. Dry off machinery to protect it from rust before testing.
- Photograph and do not discard property because insurers may have salvage rights. Work out a salvage plan with the insurer concerning property that cannot be replaced.
- Create a loss account general ledger and record all costs associated with the loss. Rely on work orders, job accounts and accounting procedures.
- Keep a daily log on work that occurred, anyone involved and their objectives. Record worker hours and straight wage, overtime, and variable payroll costs.
Like other business dealings, there may be disagreements on coverage and loss and the need for negotiations. Attorneys can help represent your interest with carriers.