Construction claims: How to avoid common pitfalls
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company’s approach to construction claims management processes could have a dramatic effect on insurance costs. Insurers are increasing their focus towards insureds’ claims performance and a proactive approach to losses is crucial. Insurers have always placed weight on a client’s claims experience as their insurance program approaches renewal. In particular, their large and complex claims record will be scrutinized. You need to demonstrate that losses, when they happen, are appropriately managed and lessons are learned. Steps to a smoother claims process In the event of a claim, contact your specialist construction broker as soon as possible. They’ll ensure your insurance carrier is notified, allowing you to maximize your settlement and finalize the claim in the most expedient manner. Consider the following: 1. Understand your coverage and obligations Putting effective plans into place now is the key to getting the payment you expect should the worst happen. Ask your construction broker for advice on development of claims protocols. Claims protocols: It’s crucial to establish and document the process and responsibilities of all parties in the event of an incident or loss. Doing so will provide clarity and structure for those involved. Protocols normally cover the following: initial steps, the information that will be required, the means by which it will be gathered and documented and the individual responsible for these processes. 20 Vancouver Island Construction Association 2019
2. Have an internal system that captures the data to support your claim Businesses need systems in place that inform insurance managers of claims or related circumstances. Devise protocols for ensuring claims are reported to those individuals and that they are made aware of incidents. You will have to provide evidence to support your claim to ensure all relevant information is collected and the initial actions do not prejudice your case. It’s best practice to ensure the insurance manager oversees all communications in relation to the loss. Develop and deliver education programs around what is covered under the insurance program and what to do in the event of a claim. Making claims protocols easily accessible throughout the business will support your approach. You need to be able to provide evidence of the claim effectively and efficiently. A defined data capture procedure eases this process. It will enable you to work with your broker, insurers, and appointed experts to help confirm the cause and quantum of any loss and to facilitate the payment process. 3. Know and comply with policy terms and conditions, particularly claims conditions It is important to know the obligations you must comply with to avoid jeopardizing your right to recovery under a construction insurance policy. It’s vital that this is understood not only by your company’s insurance team but by those onsite who are likely to be the first responders.
Typically claims conditions will include: • Your obligations regarding the notification of a claim • Your obligations regarding the notification of a circumstance • Time limits regarding the notification of claims or circumstances • The nature of the information that must be provided • To whom the notification must be given • The insurers’ rights in respect of a claim Note that all relevant provisions are clearly identified as Claims Conditions. Also, be aware that they might appear in other parts of the policy such as the Insuring Clause or the Definitions. Developing a compliant list of first actions for those on site - and making this information readily available - will help ensure your rights of recovery are not put at risk. How a construction broker can help Large and complex claims are rare, but having a process in place is a crucial element of managing construction risk. A mismanaged process could have a significant financial impact. Ensure your broker has the expertise needed to prepare and settle claims successfully. At JLT Canada, our team provides a seamless claims management system, including the coordination of insurers and loss adjusters, as well as access to a specialist team in the event of a major loss. Contact our construction team at ClientFirst@jltcanada.com for further information on our product and service offerings. n
