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The insurance claims process doesn’t always run smoothly, despite the best intentions of wanting to fully satisfy claimants. Thinking through how to manage a difficult property claims scenario in advance can go a long way towards minimizing disruption and facilitating a smooth resolution when such a situation arises.
Let’s look at a hypothetical scenario. There is a reported loss involving several insured warehouses in Texas. The insured has retained a contractor who is acting as a public adjuster, and they are claiming that all of the roofs were damaged by hail and are in need of replacement. The contractor has provided a cost estimate to replace the roofs, but with completely different materials to those in place at the time of the loss. The estimated cost presented is initially twice as much as the estimate your consultant provided. The contractor refuses to provide a detailed scope. With each meeting, the contractor’s price keeps changing. The date of loss is from 2020. It’s now 2022.
The contractor in this example provides a bulk estimate, which changes with each meeting, and will not commit to scope or cost to complete repairs. What’s the best way to resolve a claims scenario like this?
Following are several steps an insured can consider to facilitate the smooth resolution of difficult property claims situations.
On receiving the Notice of Loss, make a coverage review based on the description of the loss as reported, including the following:
Make a list of any potential vendors that might be needed to assist with the investigation such as an Information Assurance specialist, an Cause & Origin (C&O) expert, a structural engineer, meteorologist, a forensic accountant, and an outside coverage counsel.
During initial contact with the policyholder and/or the PA, it’s important to set the right tone. Manage expectations and ask for the insured’s explanation for late notice of claim. Request all current documentation, including expert reports, estimates, PA or contractor contracts, photos, etc.
Then, based on the outcome of the initial call, determine if an C&O expert is needed to accompany an initial inspection. Consider the need for written notification/correspondence after the call relating to reservation of rights (ROR), claim acknowledgement, etc.
An initial Request for Information (RFI) in the ROR should include the following:
Always aim to keep up the momentum of the claims process by asking for follow‑up site inspections with the insured and contactor. If the initial inspection fails to identify any damages to the reported date of loss, continue the investigation – Can the damages be related to another weather event that occurred in the policy period?
The most important tool is communication; keep the lines of communication with the insured and/or PA open. Be willing to change your position as new information becomes available – inputs including weather data, maintenance records, and roof history are all important tools. Be transparent and keep the insured informed as to the facts of the claim as they develop.
You could also suggest obtaining bids from licensed, independent roofing contractors and present them to the insured/contractor with the understanding that they are available to be hired directly by the insured.
In other words, don’t dig in your heels even when it is clear that firm action such as an examination under oath (EUO), mediation or litigation is required. The need to pursue any of these actions of course opens up a whole new chapter. Insurers should reach out to their reinsurers early in the claims process for advice, expert opinions, and vendor referrals.
In the meantime, if you have questions about any of the above, don’t hesitate to contact your Gen Re Claims Executive representative. I’ll be back soon with more on recorded statements, mediation, alternative dispute resolution, and the best way to handle property appraisals.
