Valid property insurance does not guarantee that the indemnity will be paid in due course if your own employees do not know the basic steps they should take in case of an insured event. That is the conclusion we came to in the course of handling multiple real-life claims settlements.
Why does it happen and what should be done to avoid it?
Very often the extent of the insurance coverage, the set of insured perils or the deductible amounts are defined by the company’s owners or top managers. They are however often the only ones who possess all the information regarding the nuances of the insurance policy. At the same time rank and file employees are the ones who should take the first steps when something unpredictable happens. They are security, salesmen or technical staff. Mere reporting about the situation to their boss is not enough. Let’s take the trade center located in some distant part of Ukraine while the owners are based in Kiev. Regional manager can lack sufficient knowledge regarding the insured objects and the responsibilities of the insured stipulated by the policy. The news of the insured event can reach the head office with the delay while most insurance companies require that they be notified about the insured even within 24 hours. Delayed notification can serve as the legitimate ground for the indemnity denial.
Let’s review a real-life example. The owner of the trade center found out that there have been a couple of insured events for the past three years. They all concerned the broken glass. While the employees had no idea they were entitled for the insurance indemnity in accordance with the insurance policy, the glass elements have been replaced at the Insured’s expense. As a result the company could have received UAH 50,000 from the insurance company instead of spending this sum from their own budget.
Here is a simple action plan that should follow the conclusion or renewal of an insurance policy.
- the extent of the insurance coverage: whether or not the buildings, their structural parts, interior and exterior finishing works, utility lines, equipment or liability are covered by the insurance.
- list of the insured perils and the category which the occasion may falls into (machinery breakdown, broken glass, damage caused to the tenants’ property etc.)
- deadlines for notifying insurance company. They can vary from immediate notification to 2 business days etc.
- the institutions which should be notified about the insured event in the first place. It may be head office, insurance company or insurance broker. Naturally, the contact details should be at hand.
Actions which should and should not be taken deserve special attention.
As to the mandatory steps, they are quite simple – the fire-fighters or police should be called right away. You should also put as much effort as possible to save the maximum amount of property from the potential damage. They are basically the steps you would have taken even if your property hadn’t been insured. Some pictures or footage from the scene of the accident are a plus. So are the additional testimonies from the witnesses and explanatory reports from the employees.
As to the unadvisable actions, they may be the following: cleaning everything up as soon as possible. That should be done only after the insurance company’s representative has examined the site of an insured event. Otherwise insurance company can express doubts regarding the actual cause or extent of the damage.
Here is an example. After the fire in a restaurant the designer couches and TVs were included in the list of the damaged property. At the same time they were not identified among the remains of the damaged items as they had been thrown away before the loss adjuster had a chance to examine the site of the insured event. Therefore make sure to save all the property for which you expect to be indemnified.
Finally, inform your employees that they should be careful in disclosing any information relating to the insured event or the insured object altogether. All the statements or actions should receive prior approval by the top management, lawyers or insurance broker.
