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The Ideal Process
In most cases, filing
claims and getting reimbursed is fairly straightforward:
1. An incident occurs
resulting in damage, loss, or potential liability.
2. You report it.
3. An adjuster or other
authorized insurance representative investigates the matter.
4. Reimbursement is
granted.
It would be ideal if it
always worked this way seamlessly. Unfortunately, delays or problems in this
process aren't that uncommon. The challenge is that the claims process, which is
the most important aspect of a policy for most businesses, is hidden until it is
essentially too late to rectify.
Reimbursement
Problems
Obviously, insurers need
to make sure they reimburse only the appropriate amount for legitimate claims.
An unfortunate result of this that sometimes you may receive less than what you
expect, or be denied altogether for a claim. Claims problems typically have the
same root: the insured business forgets or is unaware of particular provisions
in a policy that limit the size of the settlement they are entitled to. This can
be a result of a policy sub-limit, or coinsurance penalties applied after a
claim is filed. Businesses certainly have the right to contest under-reimbursed
claims.
Other problems arise
when a company denies coverage on your claim. In this situation, you will need
to represent your case to the insurer.
Who can help:
Your Broker.
For contesting
under-reimbursed claims, it can help tremendously for your broker (or another
direct contact) to champion your cause through the appropriate channels.
Established
organizations.
To get a handle on other
avenues to pursue, turn to your state insurance commission. Or try the Insurance
Information Institute, which has a group of insurance specialists who can
provide help. They can be reached at the National Consumer Helpline of I.I.I. at
800/942-4242.
Processing Claims
Since the adjuster is
primarily responsible for determining the fate of your claim, it pays to make
his or her job easy. Present your claim as convincingly as you can, offering
supporting data whenever possible, (especially on higher-cost items). Also,
since adjusters are usually handling dozens of other claims on top of yours, be
pleasant and straightforward in your dealings. Also, keep good records to make
sure your claims will be speedily processed. Keep duplicate records of key
purchases and income statements offsite, for example. For an easy record of your
property, videotape it--this can help verify your property or business
interruption claim.
Liability claims can be
more difficult to process because they can be filed months or years after the
incident in question. As a result, insurers are very interested in making sure
that potential claims are investigated as soon as possible.
Claims History and
Premiums
Your premiums will be
affected by your claims history--not only the claims that are paid out, but also
any potential claims that may be filed.
Frequent claims.
In general, insurers
will view a company with frequent claims as a higher risk than a company with
infrequent, though large, claims. Therefore, it may make sense to establish a
policy where your company authorizes the payment of small claims.
From the insurer's
perspective, it is worth settling these small claims immediately rather than
engage in a protracted dispute. Also, you may want to keep track of these claims
in order to see how you can reduce their frequency.
Future claims.
Another component of
your claims history are unresolved and potential claims. Money is set aside in
what is known as case reserves, in the event they need to be compensated. As
time passes, you should make sure the appropriate adjustments are made to these
reserves. If you believe there may be too much is being withheld, you may want
to negotiate for lower reserves.
Watch your records.
Because it is so
important to maintain a good claims history, have your loss records sent to you
regularly so you can check what sorts of claims reserves you have from year to
year. You should also check for errors in your loss records as you would a bank
statement.
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