What to Consider When Making a Property Claim

Catastrophic property claims, though usually infrequent, can cause distress to the client’s operations and earnings, the team members charged with managing them, and the company’s reputation. Business owners often are reassured that their property insurance will cover the loss—but of course, it can be a complicated journey to payment.

From gathering facts to working with potentially dozens of specialists, the process from claim to payment can be a long one. Working with an experienced claims management expert will make the process easier—and get you the maximum settlement amount. Here's what you need to know about the claim process and how to ensure you get paid as quickly as possible.

What to Do at the Scene

Whether the loss is a fire or water damage to the insured premises due to a roof leak from a recent storm or pipe break, the response is to take action to mitigate the damage. Here are the steps to take once you're made aware of a loss.

1. The loss scene should not be disturbed until the local authorities release the scene—in the event of a fire, the local fire marshal will advise. If there is a potential for subrogation, you may need to provide notice to the appropriate parties, allowing time for participation in destructive testing and requiring preservation of “evidence,” which may impact your ability to subrogate for recovery.
2. Insurance carriers are interested in damage documentation. Provide any photographs or additional information as it becomes available.
3. Secure the site and do all that you can to prevent further damage to the property and equipment involved.
4. Provide preliminary information about the damage sustained.
5. Keep receipts and invoices associated with debris removal, clean-up, and repair costs. Your broker will be submitting these receipts to the carrier for reimbursement. You may want your accounting department to assign a special accounting code that enables your company to group expenses related to this event.
6. An insurance adjuster will be assigned to the claim. They will want to visit the site and work with you to settle the loss.
7. Your broker will be your advocate for coverage and assist you with the documentation submission.

Submitting the Claim

Once the dust has settled on the scene, you'll want to submit a claim with your property insurer. Here's the process:

• The client submits the claim to your broker.
• The broker reviews the claim, requests additional information, and submits it to the insurer(s).
• The insurer will review the claim, ask questions, request additional information, provide opinions for or against claim payment, and perhaps issue an initial claim payment offer to settle the claim.
• The insurer may also decline the claim.

The insurer has internal sources and may have retained a forensic accountant to assist the adjuster with the loss evaluation. This accountant represents the insurer's interests, not yours, and they are paid by the insurer as an adjustment expense, which does not reduce your benefits.

In making your decision, consider whether you have internal expertise and resources available to manage a claim of this size. You will need to review the schedule prepared by the insurer’s expert, scrutinize the expert’s work, provide counterpoints, and verify the schedule’s accuracy.

If an expert is needed, we recommend using the coverage under the policy to engage the accounting firm up front in the early stages of the claim. This is a critical decision, and the accounting firm will measure the loss from your perspective, not the insurance company’s interests.

The Woodruff Sawyer claims management consultant will assist you throughout the claim process, including reporting, counseling, monitoring, communicating, recommending, negotiating, interpreting, and advocating for coverage on your behalf. We'll work side by side with your experts and your team to assist with the delivery and presentation of your claim submission to the adjuster and its experts.

Moving Toward a Resolution

Your claim consultant will review the loss information and confirm the facts to prepare the notice of loss to the carrier/insurer, excess insurers, and any other insurers or lines of coverage that could potentially respond to the claim. In some claims, there may be a potential for coverage questions, which usually arise from the varying interpretations of the policy terms, recent changes in the law, or case law resulting from similar cases that went to trial. As a result, the insurer may issue a “reservation of rights letter.”

On the bright side, a reservation of rights is better than a coverage denial letter, and it is very common for many claims to be resolved in totality without ever reaching a final resolution of the coverage questions. A coverage question may not be resolved until there is a final adjudication in court. The insurer’s defense obligation continues at its expense until the claim is resolved or the court determines there is no coverage. In some policies, there is a provision for the allocation of indemnity expenses between covered and non-covered claims.

We will assist you in reviewing your claims issues, advocate for coverage on your behalf in the presentation of your claim to the carrier, and work to bring resolution to these issues as they arise.

The Analytics: Our Client Advocacy Team Gets Results

Our clients often ask us for statistical data to show our value-add and why they should place their insurance through Woodruff Sawyer. Over the years, we have tracked the results attained for our clients by comparing the adjuster's initial offer for settlement against the outcome. Here, we'll share the benefits and value of the Woodruff Sawyer claim advocacy group, as well as a few examples of recent settlement incidents.

• Freezing temperatures in Texas: During this recent event, several insurers were considering denying the claim for the freeze damage to the pipes and landscaping. We advocated for coverage for our clients and were successful in overturning the insurers' denials, resulting in payment for the plumbing fixtures that ruptured due to frozen temperatures.Additionally, we have advocated for several clients for payment on damages to landscaping due to the freeze peril. In the case of one client, the loss was measured by the insurers at approximately $34 million. As a result of our advocacy, we were successful in obtaining an additional $2.7 million for the plumbing damage. For another client, we were able to advocate that the policy did not specifically exclude landscaping damage due to freezing temperatures and were able to obtain a settlement of approximately $225,000 on the landscaping portion of the $1.2 million loss.
• Hurricane Harvey: During the claim adjustment process on a loss, Woodruff Sawyer advocated for its client on a coverage dispute regarding the interpretation of the “extended period of restoration” in the policy. As a result of the claim advocacy and settlement with insurers, an additional payment of $2.4 million was extended to our client, for a final claim settlement of $31.2 million.

As you can see, these are significant achievements resulting from our claims advocacy team in collaboration with our clients and experts. The expertise of our claims advocacy team helps us achieve these significant results for our clients outside of litigation.

Despite best efforts by all parties to develop policy wording that should minimize coverage disputes, policy interpretation, legal decisions, and the experience of those involved in the claim handling can lead to multiple interpretations of the policy.

Our Claims Expertise

At Woodruff Sawyer, claims management is an essential part of our services. Woodruff Sawyer has the largest percentage of claims professionals to staff in our industry—currently 5% of staff, while most US brokers average less than 1%.

Our property claims consulting team provides cradle-to-grave service. We help to develop the overall claim strategy and timeline, establish milestones for advance payments to help manage cash flow, and select and implement your loss team (the building engineers, equipment specialists, inventory specialists, and forensic accountants, etc.). We leverage our industry relationships to bring you best-in-class loss consultants. We act as the project coordinator/leader and your coverage advocate when the inevitable settlement disputes arise. Whether the claim is two weeks or two years in duration, $50,000 or $50 million in cost, Woodruff Sawyer’s property claims team will be there to manage the process and settlement negotiations with you.

Coverage issues, including those related to lease language, are managed by the Claim Consultant assigned to manage your property losses. Our property claims team for our real estate clients are adept and accustomed to advocating in favor of coverage should disputes or ambiguity arise around any coverage issues, including those related to your leases. We have internal and external legal resources to assist if issues arise that require a review of statutory or common law.

Contact your Woodruff Sawyer team to learn more about property insurance and claims.