By Cedric E. Stephens, ContributorQuestion: My family home was burnt to the ground last week. The house, which has a mortgage of $800,000, was insured for $4.5 million. Contents were covered for $1.2 million. I have never dealt with something like this before. What can I do to ensure that I recover all that I am due and in the shortest possible time?
- B.J., Kingston 10.
Answer: The fair and quick settlement of claims like yours is dependent on many things. The claimant should understand the process. That is, all the stages from the time the claim is reported [to the insurer] until the settlement cheque is paid or liability is denied. This is the "big" [or macro] picture. The "small" [or micro] picture is also important. Knowing what the policy says you should do and complying with it, helps. Delays and other problems often arise because many claims staffs bring little or no thinking skills or technical know-how to their jobs. Since most consumers don't know what to do, it is no wonder that insurance gets a bad name.
THE BIG PICTURE
Here is a list of what normally happens after a claim like yours has been reported to an insurance company:
1. Checks are made to ensure that the policy is in force, that the damaged property is insured and that the premium has been paid.
2. When the insurer satisfies itself that the policy was in force, it appoints a loss adjuster.
3. The loss adjuster visits the scene of the loss with two aims in mind. The first is in three parts - to verify that a loss has occurred, to determine that the cause was not excluded, and to provide an estimate for the insurer, assuming coverage was in force. The second reason is to get written information from the insured to calculate the amount of the loss.
4. After receiving proof of loss from the claimant, the loss adjuster undertakes investigations to verify that information.
5. When the adjuster has verified the proof of loss, he will present a form of acceptance to the claimant for signature.
6. The loss adjuster then submits the form of acceptance and a report to the insurer.
7. If the insurer accepts the findings of the loss adjuster it will prepare a form of release which is sent to the claimant to sign. On the other hand, if the findings of the loss adjuster are rejected, the company can either ask the adjuster to clarify or deny the claim.
8. Once the claimant has signed the form of release the settlement cheque is prepared and dispatched.
The time span between 1 and 8 can extend over a matter of weeks or months. My experience is that if there are no complications and if the claimant submits the proof of loss quickly, this type of claim can be settled within a few weeks, rather than in months.
TYPICAL HOUSEHOLD POLICY
The typical policy provides very little information or guidance about what to do in the event of claims. It says that policyholders should, initially, report claims as quickly as possible. The report can be either by telephone or in writing. Further details are required in a second report but these are not spelled out in the policy. This is where the loss adjuster comes in. Generally, he will request the following information from you to calculate the loss:
Loss of or damage to buildings - two detailed estimates prepared by reputable builders to repair or replace building.
Loss or damage to contents, including an itemised description of the articles, when they were purchased, the original and replacement cost or cost of repair.
Claims for the loss of contents often tend to be very problematic. This is because there are often hundreds of different items in the home. Furthermore, it is a very painstaking process to remember them and supply the details insurers ask for. Make sure that when you meet with the adjuster that you ask him to set out in writing all of the things that you will need to prove your claim and keep in touch with him on a regular basis.
Finally, if your policy was destroyed in the fire get a copy from your insurers and study it very carefully. This could give you a few ideas of some of the other things you can claim for in addition to your house and contents. Best of luck to you and your family.
Cedric Stephens provides advice on risks and insurance. If you need free information or advice to solve a problem, write to The Financial Editor or, contact Mr. Stephens directly at aegis@cwjamaica.com
