In the event of damage being sustained to property, it is invariably the case that certain things need to happen immediately – the damage has to be assessed, estimates obtained, contractors engaged and provision allowed for the work to take place. However one of the things that a client should also do immediately is to notify the matter as an insurance claim.
Why Should a Property Claim Be Reported Straight Away?
The swift reporting of property claims has a number of benefits, some of which are practical and others which could best be described as ‘contractual’. To start with the ‘practical’ benefit, having an incident reported quickly enables insurers to undertake assessment of the damage quickly and confirm that the costs are acceptable under the terms of the policy. To use a very simple example, if there is a fire in a roof which is not reported, only for a storm to come along a few weeks later and cause additional damage, it will obviously be difficult for an insurer to assess which part of the damage relates to which incident.
On a similar point, any damage that is caused by an incident can become significantly worse if expert assistance is not engaged immediately, and the late reporting of an incident may cause insurers to query if their position has been prejudiced and costs increased by the failure to take swift action. As a final note, if the damage to a property is as a result of the actions of another party, perhaps an external contractor for example, then early notification of a claim will give the insurers the best chance of being able to recover any costs from this other party once repairs are complete.
Regarding the ‘contractual’ justification for a swift reporting of incidents, many policies will contain conditions that oblige a policyholder to notify loss or damage to their insurer within a very narrow timescale after an incident occurs. Needless to say, failure to adhere to these conditions could give an insurer justification for declining cover on a claim, especially if this late reporting is also coupled with the suggestion that costs have been increased as a result of the same.
Furthermore, if an incident is reported so late that the notification falls within the following policy year, this can cause significant difficulties with insurers, who will likely suggest that they had not been given the opportunity of factoring in all the elements of risk to their calculation of premium.
If the incident is known about before renewal, and ideally quite some time beforehand, then this gives all parties the opportunity of establishing both the cause and cost of the loss, as well as allowing the consideration and engagement of relevant post-incident risk management measures, which in turn assists in managing the negotiation of premiums. A claim reported post-renewal is an ‘unknown quantity’ and could cause insurers to demand an additional premium or even withdraw cover entirely.
The ability to defend claims is almost always at the forefront of a consideration of a business’s health and safety program – yet one key element of the claim process is often overlooked, despite it being crucial to the potential defence of any case. This is the actual reporting of the claim itself and delays in this regard can unwittingly undo a lot of otherwise good work undertaken by clients in managing their exposure to risk.
When Claims Reporting Goes Well
The main point to emphasise is how important it is for clients to report incidents when they happen.
When an incident is reported quickly, this gives us and the insurers a good chance of investigating liability before the claimant even thinks about making a claim, and if the claim is potentially spurious it means that we can respond to their solicitors within 24 hours to tell them that we deny liability. Needless to say, any suspect claimants who are looking to make some quick money from a dubious claim may find that they do not have the requisite focus to pursue a claim in which we and the insurers are clearly going to make it a laborious and time-consuming process. Equally, if we have investigated the incident and we are in fact liable then we can commence negotiations over damages immediately, thus cutting down on legal costs and reducing the lifespan of the claim. Both scenarios ultimately limit the costs held against a client’s claims history, which obviously helps to manage premiums as well.
When Claims Go Bad
Needless to say, the flipside to the above is when clients fail to tell us about accidents, only for us to find out about them at some later date.
Late notifications, often after the receipt of a formal claim, will immediately place us on the back foot when it comes to investigating liability and responding to the claimant’s allegations. If the first the insurers know about the claim is when the CNF lands from the claimant’s solicitor, then one often finds that all of the legally-allowed investigation period is spent trying to work out what happened and whether we have any defence. Throughout this time, the claimant’s solicitors will assume that our lack of formal response right up until the deadline for a liability decision is invariably because we are uncertain of our position and attempting to produce a full defence in the face of limited available evidence.
Furthermore, if a claim is reported a significant time after the event itself this will make any investigation incredibly difficult to complete in a satisfactory manner and may well prejudice our ability to defend against the third party allegations. Obviously staff come and go over time, and even the layout of a property can change between the date of an incident and the time that it is submitted as a claim. Consequently the ability to collect witness evidence, take photos of the scene and generally assess liability is severely hampered by the late notification of an incident. Indeed, in the very worst case scenario, the insurers may feel that the failure to report the incident is indicative of a serious breach of policy conditions, thus prejudicing the ability of the insurer to defend the case and therefore leaving the client exposed to a withdrawal of indemnity. This is, obviously, an eventuality that we want to avoid at all costs.
In short, we would urge clients to report all incidents to us as soon as they are aware of the same, whereupon our claims team will guide them through any investigation/assessment process necessary.
If you’re an NDML client, you can use our online forms to record your claim 24 hours a day, or talk to our claims team by calling 0344 488 9205