Storms Ciara and Dennis – maximising recovery from your insurance

Issue

Top tips

Notification

Property and business interruption policies invariably require policyholders to notify claims or circumstances which may give rise to a claim, within a certain period of time.

Review the notification requirements in your policy carefully.

In addition, some policies require notifications to have a certain format or content.

Seek advice from a broker or lawyer on your obligations.

Failure to comply with the notification requirements can lead to the claim being forfeit.

Act as quickly as possible.

Claims adjustment

Once you have made a claim, the insurer will typically appoint an adjuster to investigate the claim and start assessing the quantum of loss. 

Co-operate with the insurer’s claims adjuster so that they can progress the claim.

It is important to remember that the loss adjuster is there to represent your insurers’ interest – not yours. Part of their remit is to identify evidence which may permit the insurer to decline your claim. 

If you are uncomfortable with the loss adjuster’s line of questioning, seek independent legal advice.

Quantifying claims

Quantifying a policyholder’s claim for property damage and business interruption can be complex.

Given the complexities – do not accept the insurer’s adjusted claim number at face value.

Business interruption claims can be particularly challenging. Common issues that arise include:

• How does widespread damage, such as a flood, impact coverage? In Orient Express v Assicurazioni Generali the Court held, in the context of New Orleans floods caused by Hurricane Katrina, there was no entitlement to BI cover because the policyholder’s losses were caused by the closing of the city.
• Are there policy extensions, such as denial of access cover, which can mitigate this issue?
• What is the trigger point for the start of the indemnity period – damage to the property / machinery or the interruption to business operations?
• What is the basis for calculating BI losses – gross profit, gross revenue or increased costs of working? The policy will usually include a formula but it is important to note that these do not operate in the way accountants / finance teams might expect

Be willing to scrutinise how that number was calculated.

If you are in doubt, seek advice from a lawyer on the basis of your entitlement to cover.

Do not accept delays from your insurer

When an event arises causing widespread losses – such as major floods – insurers can be inundated with claims. This can result in claims handling delays as insurers struggle with the delays.

Keep up the dialogue with your insurer and ask them to update you on the progress of your claim.

While a certain level of sympathy for insurers may be warranted, this has to be tempered against the needs of policyholders. Where there has been a significant interruption to your business, the liquidity provided by a BI policy can be vital to your solvency.

If you have pressing business costs that you can only meet once you have received the insurance proceeds – let the insurer know as soon as possible.

In that regard, the Enterprise Act 2015 permits policyholders to sue insurers for damages where they unreasonably delay making indemnity payments.