10 Tips For Getting Claims Paid

Originally published in Risk Management magazine (June 2012)

Getting claims paid can be difficult and often, the larger the claim, the more difficult it can be. In many cases, it seems like there is an invisible "seven-digit" exclusion written into all insurance policies. If the claim is $1 million or more, there is greater resistance to payment, in part because insurance companies often refer larger claims for review by counsel. This often leaves the policyholder fighting for payment of claims that should not be disputed.

Set out below are 10 tips for getting claims paid. Although there is no guarantee that if all the steps are followed, the claim will be paid, following these steps may help minimize the resistance.

1. Give Notice Early, Broadly and Often

   Some first party insurance policies require the policyholder to give notice of a claim within a fixed period, sometimes as short as a week. Therefore, when a claim arises, give notice as soon as possible under as many insurance policies as may be applicable. And supplement that notice when information about the claim becomes more available and developed.

   Risk managers sometimes fear giving notice, as they believe it may impact renewal. The loss should be identified anyway in the renewal application to prevent a misrepresentation/concealment defense.

   Although almost all states require that the insurance companies demonstrate prejudice (or that the failure to give notice was a material breach) if they seek to deny coverage on grounds that the policyholder failed to provide timely notice, the better practice is to give notice early, broadly and often. This minimizes the chance that late notice will become a defense to coverage.

2. Assemble the Right Team

   Your team should include people familiar with your loss and with your insurance coverage. In addition to people from risk management, consider who else might be needed to assist the risk manager: accounting firms, forensic accountants, actuaries, loss adjusters, insurance brokers, engineers, environmental consultants, insurance archaeologists, and maybe even policyholder coverage counsel.

3. Gather All Information

   Gather and inventory your company's insurance policies. Now (before you have to handle the loss) is a very good time to gather and inventory all of your company's insurance policies. Index them. Your insurance broker may help. Having this done before you have to handle the loss will make providing quick and broad notice easier.

   Gather...