One of the most common questions I get from clients is whether or not they should file a claim, and if so, when. While these are important considerations, don’t let uncertainty prevent you from taking action on a potential claim. Timeliness is critical to achieving a good insurance outcome when you’ve experienced a loss.
What if you aren’t sure if an actual loss has occurred? In the scenarios below, consider whether you would file a claim right away, or wait until you knew more about potential losses.
“I had a minor car accident where I rear ended another vehicle with three people inside and everybody said they were not hurt. I do not have the police report yet. Should I report this to my insurance company?”
“One of our customers slipped and fell and said they were hurt even though EMS came out, but they did not transport our customer. Do I need to report to this our insurance company?”
“Our employee fell off the ladder and said he was ok even though we told him to get checked out and take the rest of the day off. We plan to pay the urgent care bill ourselves. Do I need to report this to our insurance company?”
“Our email and website was hacked two weeks ago, and our IT team is still investigating what happened and what company assets, if any, were affected. Do I need to report this to our insurance company?”
Yes. Yes. Yes. Yes. In all of the scenarios above, a timely claim reporting is not only warranted, but urgently recommended.
Surprised? Insurance policies have a requirement cited in the policy conditions and duties, that the policyholder is required to provide prompt notice as soon as possible, or “as soon as practicable,” to the insurance carrier of any incident that could lead to a loss.
Timeliness in the claim submission process is beneficial across all lines of personal and commercial coverage, including:
- Automobile: The claim adjuster will begin their claim investigation immediately upon receipt to determine liability. If the policyholder is legally liable, they then contact the claimant to process their claim(s), including handling the vehicle damages, awarding of a rental vehicle, and assessing bodily injury. And remember—just because someone at the scene says they are not injured immediately after the accident does not mean that they will not later present an injury claim. Timely claim reporting helps keep overall claim costs, cost of repairs, rental car charges and charges for unrelated medical treatment to a minimum.
- General Liability: Timely reporting to the carrier will allow the claim adjuster to gather relevant facts with potential to impact the claim in the short and long term, including witness statements, video surveillance and contract review.
- Workers’ Compensation: Early involvement by the carrier allows the adjuster to thoroughly investigate to determine if the injury compensable. Timely reporting further demonstrates the employer’s concern for the well-being of their employees and helps boost the injured employee’s morale. Delayed reporting increases the chances of the injured employee seeking legal representation. Timely reporting significantly affects overall claims costs resulting in lower overall premium costs due to available discounts and experience modification factors. In addition, when claims are reported immediately the claim adjuster is able to direct medical treatment.
- Cyber incidents: Some carriers provide a so-called ‘response coach,’ or loss mitigation services providing guidance to the policyholder. Timely incident notice to the carrier allows these services to be provided early on in the process and hopefully mitigate costs and damages. In fact, my Sentinel team and I have seen more than a few policies denied coverage over the years due to late reporting; one of the three conditions of a cyber policy that must be met regarding claim reporting conditions.
- Property: As with any claim, the insurance carrier will thoroughly investigate the claim, to include determining the cause of the damages. The evidence must be preserved as the carrier may want to inspect the cause of the damages to determine why this product failed; water line leaked, new dishwasher leaked, etc. If it is determined there was a product failure, the carrier may pursue a subrogation claim against the at fault party, after paying the policyholder.
Some specialty lines of business, including Executive Liability, Cyber and Professional Liability, have stricter reporting guidelines and benefits to timely reporting. We’ve seen Employment Practices Liability policies that offer a 10 percent reduction of the policy retention for that claim when the policyholder reports the incident within the time frame outlined in the policy.
Keep in mind that when a claim is reported late and the policyholder has retained the services of the corporate counsel, the carrier may not reimburse or allow these costs to be applied to the policy retention.
Sadly, late reporting to the insurance carrier may cause the carrier to issue a coverage letter reserving their right to later deny coverage under the policy, while they conduct their investigation. That is not a good way to start the claim process. Timely reporting allows you and your claim adjuster to work together towards the best possible outcome.
Bottom line: If you have a question as to what to do after an incident, please contact your Sentinel advisor as soon as possible for guidance on how to proceed.
