Claiming Against Your Insurance Policy – Is there Such a Thing as a Straightforward Claim?

Natural disasters, pandemics, cyber threats, fire, human errors, accidents, climate change…. and the list goes on and on. We are living in an unpredictable and ever-changing world where there is risk in almost everything we do. Unexpected events and accidents happen, and their impact can be disastrous. The purpose of purchasing insurance cover is to transfer the risk and reduce the adverse financial impact of such events. A good claims outcome is undoubtedly the most important deliverable of the insurance product that you have bought and you would understandably expect the correct claims to be paid in the shortest possible time.

Many policyholders will admit to having never read their policies. This may lead to challenges when one needs to make a claim. The insurance policy is a contract between you and the insurer, and hence both parties are bound by its terms and conditions. A breach of those conditions may risk the cover that you need so much when those rainy days come around.

From our many years of claims handling experience, we have helped our clients deal with some common problems:

1.Awareness of cover
With the length and complexity of some policy wordings, it is difficult to be 100% familiar with your insurance policy. Do not assume that similar policies provide the same cover. A small difference in policy wordings may result in a different coverage trigger. You need to know what cover you paid for and understand in what circumstances you are entitled to a claim under the policy. You should also look at the policy schedule to understand the applicable policy period, insured interests, policy limits, and deductibles. There have been instances of policyholders who were not aware of the cover available to them and omitted to notify and submit an eligible claim. It is always good to have a thorough read of your policy and, when in doubt, to seek your broker’s advice.

2. Policy obligations
A breach of a policy condition may give the insurer the right to avoid the claim. Below are just a few of the obligations policyholders tend to overlook or may encounter difficulties with. 

• Time limits
  The policy provides you with cover for a certain period of time (i.e. policy period). There are often other clauses in the policy wordings that indicate the time frames for the submission of notification / supporting documents / responses to insurers’ requests. Large organizations with operations worldwide may face difficulties in adhering to the time limits, or local personnel may be unsure of reporting procedures and/or requirements and therefore fail to notify a valid claim in time, risking a denial of liability by insurers. Routine checks and clear reporting instructions to all employees should be put in place to ensure all potential claims are notified properly and on time. 
• Prior consent
  When an incident happens, we know it is instinctive to appoint an expert to investigate and assist as soon as possible. If threatened with legal action, you want a lawyer alongside you for advice and representation right away. Usually, too, you would expect your insurer to cover these expenses. It is normally a policy requirement for prior consent to be sought before appointment of experts and before you incur costs. It is reasonable to first check with the party paying the bills before you start running up the costs, isn’t it? 
• Admission of Liability
  For various reasons, including reputational and commercial considerations, or you believe that the claim against you is valid and reasonable; you may sometimes wish to settle or admit liability. If you have purchased the relevant liability insurance to cover such claims and wish to make a claim against your insurer for the liability, seek your insurer’s consent before entering into any settlement with the claimant(s) or making any admission of liability. 
• Supporting documents / Evidence
  When you notify a claim, the onus of proving the incident actually happened falls on you. You are required to provide evidence of such incidents and meet reasonable requests from the insurers for supporting documents. This means that documents and other supporting pieces of evidence will need to be diligently retained, stored, and filed. The lack of evidence is likely to result in a resounding “no claim” from your insurers. 
• Cooperation
  Like you, your insurers would like to settle your claim amicably and quickly. Cooperate with them; it will do more good than harm. Your claim process will be smoother and settlement will arrive earlier. Your insurers, with their experience in working with expert consultants and lawyers, may have recommendations for suitable experts at competitive, negotiated rates. You may have your preferred lawyer, but your insurers know from experience the best one to choose in the situation, quite possibly at a lower price. It is also a common policy obligation to provide reasonable cooperation to enable your insurer to progress your claim. 

3. Identification and understanding of parties involved
In the event of a complex claim, there may be quite a number of parties involved - insurers, brokers, loss adjusters, forensic accountants, restoration experts, technical investigators, and lawyers. Liaising with the various parties may be confusing and challenging for the inexperienced insured. Policyholders should understand the roles of the respective parties. It goes without saying that your broker will act in your best interest.

4. Basis of Settlement
When your insurer says they will meet your claim, the next questions would be, how much will they pay? If it is damage to your own property, the policy may talk about the indemnity value, actual cash value, reinstatement cost, market value, or new replacement cost. Some insureds might be confused by these terms. Just what is the basis of settlement, and is there a penalty for under-insurance? The policy wording is critical to these issues. Check with your broker if you do not fully understand the policy terms.

We hope these few pointers are helpful to you. There are of course many other issues to consider, and different claims may progress differently. Remember, should you have any doubt about claim matters, contact your broker immediately and seek their advice. It may be a natural reaction to respond to the problem immediately, but don’t forget to notify your broker immediately.

A straightforward claim: fact or fiction? At Marsh, we have guided many clients along the claim journey, and we believe that with careful management, claims can be straightforward.