Most contractors develop incident reporting protocols for their employees to follow after property damage or bodily injury occurs at their site. The process to report an insurance claim however is often overlooked when establishing these protocols.
More often than not, the reporting of an insurance claim is not the first thing that comes to mind following an accident. This is because these events can be very dramatic and overwhelming for those involved. Unfortunately, projects under construction are inherently risky, so losses are likely to occur, making it critical that Project Managers know how to react appropriately to protect the organization and minimize any liability or financial loss that may result.
INTECH recommends the following plan to help guide you on the right path. The following should occur simultaneously:
Timing is everything in the claim handling process. One of the conditions in your insurance policy is that you report a claim to your insurer as soon as possible to avoid prejudicing their investigation. That said, depending on the organization, the specific communication channel may vary. For example, if your organization has an in-house risk manager, they are likely the first person that should be contacted when an incident occurs. In the absence of a risk manager however, it is common for organizations to report claims directly to their insurance broker. Either way, INTECH recommends contractors post simple incident reporting instructions in a clearly visible location on-site so employees can quickly reference them when an incident occurs. From there, the risk manager or broker will use their expertise to assess the details of the incident and determine which insurers should be notified.
Another policy condition requires insureds to mitigate any damages that occur, that is, to prevent further damage from occurring. Depending on the type of loss, you may need to perform emergency or temporary repairs or take other mitigation actions to meet this policy condition. So, who absorbs the costs for this? Policies have specific language which states that the insured will be reimbursed for reasonable mitigation costs as a result of a covered loss.
Documenting the events surrounding a loss (the “what, where, when, how, and who.”) is critical in assisting the insurer determine coverage and liability. If done properly, it can reduce liability and help expedite the claims investigation process, which can result in more favourable results and faster claim payouts. Interviewing the right people, taking photographs, and obtaining contact information from all parties present at the time of loss is an important first step to properly document a loss.
To ensure a smooth claims process, claims adjusters require the full co-operation of project staff. Insurers will often hire an independent insurance claims adjuster to investigate a claim, review the terms of the insurance policy in question, negotiate settlements, and provide an explanation of the claims process and progress to the insurer. It is therefore extremely important that the project staff provide the assigned adjuster their full cooperation along with full access to the site and any claims related documentation.
To recap, Report, Mitigate, Document and Cooperate!
Please do not hesitate to reach out to one of our experienced Risk Consultants for assistance in developing incident reporting protocols to protect your rights and preserve coverage in the event of a loss.
INTECH is pleased to announce the launch of Claims Management Services for the Sponsors of P3 transactions. For more information on this service, please click here or contact Ariana Dalie, Director, Lender Insurance Services.
INTECH Risk Management (“INTECH”) is an independent insurance consulting company involved in the analysis, design, development, implementation and management of insurance programs. INTECH does not sell insurance, nor is it affiliated with any insurance company or brokerage. This unique independent position in the marketplace enables our consultants to avoid conflicts of interest and provide our clients with unbiased, expert advice. INTECH has been the 2015 and 2016 winning recipient of the IJGlobal Americas Due Diligence Provider of the Year Award.
For more information, click here.