Contents claim handling: avoiding common bottlenecks

The U.S. has sustained numerous natural and weather-related disasters over the past few years. Wildfires, historic snowstorms, droughts and hurricanes have caused unexpected destruction and property damage.

These disasters leave devastation in their wake. Seeing their belongings littering the landscape, homeowners find themselves at a loss as to how to put the pieces back together. The last thing on their mind is creating a content inventory.

But this is one of the first places where a bottleneck in the claims process can occur. Whether it is due to being overwhelmed or to procrastination, allowing time to go by without adequately documenting a contents loss will only create more problems for both the insured and the insurance claims staff.

This is where claims personnel and vendor partners can assist insureds in documenting their contents loss list, since any delay at the onset of a claim will only prolong recovery and any supplemental payment.

Losses that occur as the result of a catastrophe, such as an extreme weather event, can easily cause a claim to go sideways. That possibility multiplies when there are several losses resulting from a single cause. After a catastrophe, adjusters and claims departments are inundated with disaster-related claims. They have little time to review contents claims to distinguish content age or value.

An overwhelmed claims department coupled with confused insureds can be a recipe for loss of customer confidence.

Experienced contents vendors’ product knowledge allows them to efficiently resolve contents claims by valuing each item on a content inventory with current like, kind and quality measurements to accurately estimate contents losses.

Using inventory software, a contents list can be built immediately on site. The technology allows LKQ or replacement cost to be immediately applied, leading to on-the-spot settlement valuations that can be emailed to the adjuster in real time.

Another scenario that can slow the settlement of contents claims may occur if the policyholder is a fine art or antique collector. Trying to review the necessary documentation – such as proof of ownership, the bill of sale, provenance and the certificate of authenticity - to determine an art collection’s value can slow the claims process to a crawl. Whether it is a sculpture garden or a model train set, valuation can be tricky, especially if an appraisal is necessary.

Hoarding situations present another issue a claims adjuster may not be prepared for. The policyholder will need help with distinguishing personal belongings from those that no longer carry value, such as broken items or stacks of old newspapers.

Large losses, involving hundreds or thousands of items, can also prove cumbersome, causing the claim cycle to lag. This type of claim often requires extra personnel, and an already overworked and potentially understaffed claims department may not be up to the task.

These scenarios highlight the value of bringing in outside experts who specialize in contents list creation and valuation. Companies that offer this service can provide needed assistance by working with the insured to create a contents inventory list, assisting the claims adjuster by applying accurate depreciation and valuing contents in an efficient manner. This allows the adjuster to focus on coverage and what is covered under the policy.

At the scene, expert content vendors can also help adjusters manage claims from their desk, allowing more time for claims staff to focus on large and complex losses.

Prompting the insured to review and document their contents loss allows greater efficiency, a benefit to both the claims department and the policyholder.

With the time-to-valuation cut, contents claims can move to the settlement stage quickly.

Because the loss is paid quickly and accurately, the shortened claims cycle leads to a better claims closure ratio, offering an opportunity for the insurance carrier to reduce loss adjustment expenses.

Another benefit is that when a contents inventory is completed immediately after a loss, the adjuster can accurately reserve and settle the claim. This reduces the likelihood of underpayment or overpayment to the policyholder, also known as claims leakage.

In addition, when a claim is handled efficiently, a settlement can be issued promptly, affording the insured the opportunity to get back on their feet quickly. This leads to yet another benefit for the carrier, a positive claims resolution that equates to better customer satisfaction and increased policyholder retention. A win-win for everyone involved.

Since returning insureds to their pre-loss condition is the primary goal of insurance companies, reducing the risk for errors and time to settlement in content claims will lead to better claims outcomes.

Jane Nelson is vice president of business development of Claimplus. She may be contacted at [email protected].

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