Understand the Insurance Adjustment Process

Business Insurance ClaimIt is not unusual for the insurance company to compile values that disagree. These differences are resolved through Claim Adjusting, or if necessary through the Appraisal procedure, a simple, inexpensive form of arbitration. However, many recent changes in wording of some policies have included striking-down the Appraisal process and instead now require parties to go to court.

To adjust is to negotiate. An adjuster is a negotiator. Think about that for a moment. This simple fact seems the most difficult for policyholders to realize. The dictionary defines the word adjust: To settle or bring to a satisfactory state, so parties are agreed in the result: to adjust our differences, to bring to agreement, to determine the amount to be paid, as in settling an insurance claim.

Typically in the past, only the person representing the insurance company has been considered the adjuster. Historically, the policyholder has been considered–for lack of a better word–the adjustee, or the one receiving the adjustment. If you can’t imagine yourself as an adjuster, it is probably because of the word itself. When adjusting is foreign to your background, education and experience, it only follows that you would have difficulty assuming that role.

We are all adjusters, in all our dealings. You are an adjuster when you have bargaining power and are prepared to deal from a position of knowledge and strength. This mental image is important for all your negotiations. The winning combination in adjusting is having an organized, methodical, and self-confident approach. Actually, winning in adjusting is not the act of one party driving the other party to defeat, as some would believe. The perfect adjustment occurs when the enlightened needs of both sides are met to the satisfaction of both sides.

A company adjuster facing a knowledgeable policyholder usually realizes that the claim adjustment will be a cooperative effort. Also, this mutual respect may more likely lead to mutual agreement.

Probably the most difficult aspect of acting as one’s own adjuster is in having to enter the realm of the unknown at a time following a disaster. Psychologically, most people are not up to the task under these circumstances. It is very common to see people in a state of shock, confusion and helplessness. Those who are objective, informed and prepared are more inclined to be emotionally level and competent.

The time of a personal disaster is not the time to be thinking about all of this for the first time. Think about it now and take comfort in the knowledge that you are able to protect your interest without feeling at a loss, if the unthinkable does happen to you.

Some adjusting options to consider:

  1. Have the insurance adjuster representing the company handle your claim.
  2. Utilize a public adjuster. Yes they do exist, they’re few and far between, but they do exist.
  3. Adjust the claim yourself. This means much more than just telling the company that you had a loss. This means calculating what you are entitled to, presenting it in a way that they understand you have some knowledge of what you are entitled to and knowing how to negotiate best on your own behalf.

“Drive or be Driven”! The idea that you either are going to control the business transaction (because that is what it is at this point) or you’re going to want to be taken care of and just watch to see how it turns out.

It is important at the very outset to decide how you are going to handle the matter. Once you surrender authority it’s difficult to reclaim.

Here are a list of steps to take in the event of loss (these can be adapted to conform with your business):

Property Damage

  1. Mobilize your emergency response organization.
  2. Protect your property from further damage.
  3. Fix leaking pipes.
  4. Restore fire protection.
  5. Temporarily support collapsed or impaired structures.
  6. Notify your insurance broker or your Insurance Company claims representative, giving the date, time, cause and location of the loss.
  7. Board up the premises and correct unsafe conditions, if applicable.
  8. Isolate the damaged area whenever possible.
  9. Separate damaged from undamaged property.
  10. Restore power to critical areas such as freezers.
  11. Establish a loss control account to detail all expenses incurred as a result of the loss.
  12. Retain all invoices, time sheets, etc., to ensure all costs are captured and attributable to the loss, and to prevent an overlapping of normal costs with these expenditures.
  13. Obtain identification of all civil authorities involved such as fire, police, health department, building inspector, etc.
  14. Retain any piece of equipment or other property that may be the cause of the loss. This should be tagged and identified as to its function and the time and date of the incident in order to establish a chain of custody.
  15. Take photographs, if possible, prior to the removal of any debris.

Business Interruption

  1. Estimate the period of interruption to operations due to the property damage event.
  2. Determine the direct effect to operations or production, including any indirect or contingent effects of the shutdown.
  3. Determine if your company can use other facilities to make up the loss.
  4. Determine if your company can make up production through overtime or weekend work.
  5. Determine if finished goods inventory can be utilized to offset a loss of sales.
  6. Determine if your company has any extraordinary sales commitments.
  7. Determine if your company has any sales contracts that can be delayed.

Still concerned about the insurance claims and adjustment process? Contact us, we are here to help.