When you suffer an insurable event, the way you approach the claim from the start can make a huge difference in terms of how quickly the claim is processed and whether it’s approved, as these examples show.
In the first case, the business relied on a specialised piece of equipment as a vital part of its operations. Unfortunately, one day an employee dropped and broke one of the machine’s essential components. Not understanding the implications of her actions, the employee then used the broken part in the machine, causing damage and rendering it unusable.
The business owner erroneously assumed the best way to expedite fixing the machine was to send it back to the supplier. But this wasn’t ideal. Although the machine supplier sent back a report confirming the machine was broken, the supplier then lost the machine and denied ever sending a report it was broken.
Up until this point, the business owner didn’t inform her insurer about the broken part and machine. When she did, the insurer denied the claim as there was no evidence. Although the machine was no longer in her possession, there was no paper trail proving the machine was broken or that it had been sent back to the supplier. Faced with this situation, the insurer had no choice but to take the action it did.
In the second example, a car repair business had 30 cars in its yard ready to be repaired when a major hail storm came through, damaging all the vehicles on the lot. The repairer set about fixing all the hail damage the cars suffered, to ensure he maintained relationships with all his clients. Within a week, all the vehicles were fixed.
Again, the repairer didn’t immediately tell the insurer about the hail damage. When he did, the insurer denied the claim because the repairer wasn’t legally liable for the hail damage. Rather, the individual car owners should have claimed for the damage against their own motor vehicle policy.
In both these cases, the business owners did have the right cover in place. But the way they went about the claims meant they were denied. Other businesses can learn from these situations.
It’s imperative to work with your broker to tell your insurer about a potential claim as soon as it happens. There’s two different types of claims we need to think about. One is first party claim, in which the policyholder suffers the loss, which is the type of claim in the first example. The second one is a liability claim, in which a third party suffers a loss and makes a claim against your insurance cover for the amount of their loss. This is the situation with the car repair yard.
The message to businesses in these areas is get ready. Here are some steps businesses can take to do this:
- Identify your risks
- Mitigate your risks
- Check your insurance policy
Don’t assume you’re covered for flood, rain or storm water damage. Clarify how much cover you have with your broker.
Next time you suffer an insurable event, make sure you notify the broker as soon as it happens to ensure the best possible outcome.