As the cleanup and damage assessments begin in the wake of Hurricane Ian in Florida and the southeast, insurance experts are emphasizing steps that can be taken to maximize insurance coverage and recovery following the immediate crisis.
Most important, they say, things can be done to avoid or lessen disputes and hasten property damage, business interruption and even environmental contamination settlements.
“A lot of times disputes can be avoided, if you know what you're doing in advance,” says Alexandra Roje, a partner in Lathrop GPM's insurance recovery practice based in Los Angeles. “It mostly concerns documentation and timeliness, those sorts of things.”
Admittedly, she says, dealing with insurance companies isn’t top of the list for many immediately following disasters from hurricanes, floods, wind and rain.
“People are in shock, they’re in crisis,” Roje said. “And it's often easy to just say, ‘Oh, well, we have a broker, the broker will take care of it.’ And especially for companies that don't have risk managers, or large legal departments that can be assigned the tasks, it can be really daunting, and they can find themselves overwhelmed.”
Roje has a top 5 list of tips for her commercial clients that she says could help avoid missteps in the insurance process.
Give notice. As mundane as it may sound, giving notice of loss to your insurer as soon as practicable is important. Without giving notice, businesses risk of losing coverage for some or all of their claim. “Just call your broker and ask them to notify your carrier,” Roje said. “Don’t worry about all the details, just get the insurance carrier engaged and the process underway. There will be time to worry about the details later.”
Cooperate, but don’t elaborate. Do not fall into the trap of offering answers to questions that haven’t been asked or giving an opinion on how the loss occurred or what losses have been sustained at this nascent stage. Policyholders have an obligation to cooperate in the process, but that cooperation need only be reasonable. Don’t be afraid to tell the insurer or adjuster that you need some time to respond. Answering questions without thinking them through and providing unsolicited opinions are not going to make the claim process move any faster.
Limit internal emails about the insurance claim. It is easy to be cautious when talking to an insurer representative. It is not always so easy to do the same in internal communications. To the extent possible, don’t put your thoughts, opinions or “analysis” of losses, causes of loss, or coverage in writing. Things are moving rapidly in the first days after a disaster and often what we think we know now can change. Provide management with updates, but don’t offer up written opinion or analysis. You don’t want your email to be the one everyone points to as the reason that losses are not covered.
Get your documentary ducks in a row. Given the chaos that ensues following a natural disaster, it is important to task someone with responsibility for being the company’s voice to the insurer, and to at least beginning the process of assembling the material you will need to document the claim. That means more than just collecting the various insurance policies and insurer correspondence. It means assembling customer lists, contracts, shipment and inventory information, and other documentation needed to not only to show the value of the property lost or damages, but also to prove up the business interruption losses. As bad as the property damage might be, the down time and loss of customers may ultimately be as bad if not worse, so start pulling together the information you need to document it.
Don’t be afraid to engage coverage counsel. Unlike brokers or other insurance professionals, communications with coverage counsel are privileged and you can have confidence that they will remain protected if litigation ensues. Yet, as management sees the floodwaters rising, the natural temptation is to issue a decree that no “non-essential” costs should be incurred. Be warned: The larger the disaster is, the more likely disputes will arise, because the insurer’s exposure is probably far greater than yours. Nothing in this world is certain, but it is a safe bet that if your carrier has insured your business, they have insured many others in the disaster zone. That means any position an insurer takes on your claim may have repercussions, and as an institutional litigant, you can be sure that the insurers have already engaged counsel to protect their interests and limit their liability. So, even though the company is not in litigation, even if it has a professional risk manager and/or the company’s broker is pitching its in-house “claims advocate” at no extra charge, you still need to carefully consider engaging coverage counsel – not to file a lawsuit or start a fight, but rather, to provide privileged and confidential advice to management, to assist in navigating the process and to think through all the coverage issues and how to best handle them, so that there is no dispute down the road.
“There are so many documents and others things that a company needs to get its hands on quickly that can save so much time and effort, and avoid disputes,” she said.
Doug Bailey is a journalist and freelance writer who lives outside of Boston. He can be reached at [email protected].