Making an Insurance Claim
- Check that your insurance policy covers all your likely risks as a landlord.
- Make sure your buildings are correctly valued for their full replacement cost.
- When you need to make a claim you should follow the your company’s claims procedure to the letter.
- Consider using a claims specialist advisor / loss assessor for large claims.
Making an Insurance Claim – How to Make Sure it’s Successful
In my younger days we had a very good relationship with our insurance brokers and in turn they had close relationships with the insurance company. If there was a reason to make a claim for any part of our property portfolio it was very much a matter of telephoning the broker who would tell you exactly what to do about claiming and in most cases he would do it for you.
Hey presto, because we were not regularly making claims there was no problem – the go-ahead to repair would sometimes be instant and a cheque would appear within days, most times with no one even bothering come to look at the damage or question the claim in any way.
It gave you a nice feeling, knowing that there was mutual trust and you had a good old-fashioned business relationship – it meant that you didn’t resent paying out all those thousands of pound in premiums each year because you knew the company had your interests at heart.
Times have changed, as they do. Today it’s not so easy, and like all financial services it seems you are no longer an individual customer, just an account number!
The insurance world, like banking, finance and everything else is now much more competitive and target / profit driven. It’s also subject to fraudulent claims, so unfortunately now everyone’s viewed with suspicion when you make a claim. The industry is also regulated by the FSA, adding an extra layer of bureaucracy.
Making a Claim
It’s so easy to buy an insurance policy, but making a justifiable claim is time consuming and increasingly complex. Insurance companies use loss adjusters to protect their interests, not yours. Where your claim is a big one you might want to consider using one of the Insurance Claims Specialists or Loss Assessor companies many of which can provide a complete claim management service, valuable support and professional advice to you, the policyholder.
It’s a really good idea to check your insurance policies and the cover they provide, at least every 12 months. Maybe a quick chat with your broker and a brief skip together through the renewals paperwork when it arrives would be a good idea. If you’re like me you resist reading the small print (or even the large print) in these documents but to save problems later it’s well worth making the effort and having a clear idea of what your policies actually cover and, most importantly, making sure you are fully covered for landlord’s risks.
Secondly, make sure your properties are covered for their full replacement cost – the cost of re-building the property, not the property’s’ market value. If your insurance values are too low you could fall into the trap of “averaging” which means the insurance company will trim the payout pro rata with the percentage you are undervalued.
The only way to be absolutely certain that your values are correct is to engage a qualified building surveyor to do a valuation. The surveyor will carry his own insurance, so even if he got it wrong you could claim for any resulting losses.
However, you can get a reasonable valuation for residential properties, providing they are pretty standard, using the ABI / BCIS HOUSE REBUILDING COSTS CHECKING YOUR SUM INSURED – CALCULATOR – see link below. Commercial properties are a little trickier as there’s no such thing as a standard type or commercial property, so you will need a building surveyor.
The starting point with any claim is to inform the insurance company as soon as you become aware of the problem or potential problem. Yes, even if you know before the event that there is a possibility of a claim you should immediately inform your insurers. They have legal and technical advisors who may be able to help and advise, thereby minimising any claim.
If a crime is involved, for example a break-in, vandalism etc, you will need to inform the police immediately and obtain a crime reference number from your local force. Sometimes they will give you an incident number first followed up by a crime number by letter later.
When it comes to a claim, first check to make sure the risk is covered by the policy. If you have a reasonably comprehensive all-risks policy with public liability and landlord’s risks you should be covered for most eventualities, but you never know.
The biggest risk for landlords is not the risks to your building, though these are big enough, it’s the risks you take from third party claims for negligence which can run into thousands if not potentially millions of pounds.
Attention to Detail
Of course insurance companies are very specific in the way they define their cover and you need to avoid falling foul of restrictions, loop-holes and get-out clauses. As with everything in life you generally get what you pay for, so the cheaper the cover generally the more likely the insurer will be to put obstacles in the way. You only really find about the quality of an insurance company when you come to claim, and even the best will dot all the Is and cross all the Ts when it comes to a big claim.
You should speak to your broker or the company quickly for advice on the claim and some guidance on any excess that may apply in this case. Remember that insurance companies record telephone conversations, so be careful you don’t drop yourself right in it by admitting over the telephone to any failings on your part.
If there is an excess on this type of claim you may have to stand this cost yourself, particularly if it’s a residential property without service charges. However, with most commercial property the excess will be passed on to the tenant.
The insurance company will usually send you a claims form or you can sometimes download one on-line. In the meantime it’s a really good idea to write down all the facts of the case whilst they are still fresh in your mind, witness contact details and statements, crime number, take photographs and anything else you think might be relevant. You can then easily transfer the facts onto the claim form when you get it.
Try to set-out the case in a clear and concise way, stick to facts, avoid rambling and make sure that its understandable to anyone reading it.
Be absolutely honest and truthful as to what you are claiming for in relation to your losses and don’t try to gain from your claim, otherwise you might find yourself losing the whole thing. In addition, false claims, “attempting to obtain pecuniary advantage by deception” can result in criminal charges and even prison.
On the other hand, when you know you are in the right, persevere but be patient and polite. Claims are processed by administrators and it takes time. If you get their backs-up human nature says you could wait even longer because your application will be at the bottom of the pile.
Make sure you follow the insurance company’s claims procedure exactly. You need to read your insurance company’s guidelines on this and make sure you have followed them to the letter. If they say you must contact the claims centre by telephone, then do so, and don’t miss any deadlines.
It’s a really good idea to take photographs at an early stage especially if emergency repairs are essential. You may need to provide this information:
- estimates of repair costs
- proof of the cost of emergency repairs to make equipment or premises secure
- proof of ownership
- the cost of items being claimed for, with valuations and/or receipts
- a police crime reference number, if you have been the victim of a crime
- any damaged assets for inspection and salvage
If you need to make emergency repairs, do so and advise your insurers of what you have done – take photographs. If possible, advise insurers before going ahead, but it is most important that you prevent further damage that might otherwise increase the claim, prevent injury to others and make the premises insecure.
It’s up to you to show that you have a good claim and to prove that your claim is valid under the terms of the policy. Providing as much relevant information as possible in a clear and concise manner will help. Where the claim is for a substantial amount the insurance company is more likely to investigate the circumstances and look for reasons why they should not pay or why they should reduce your payout.
It’s likely the insurance company will employ a loss adjuster, either one of their own employees or an independent firm, where as loss is substantial. In this situation it may pay you to appoint your own expert to challenge the one acting for the company if you feel the award is low – after all the insurance company’s expert is working for and is paid for by them. Just bear in mind though, these experts can be expensive.
Claims can be slow, and to some extent it’s in the insurance company’s interests to have claims drag on – it helps their cash flow and the company’s profits. You need to keep in touch and harry them along if you feel that things are slowing down.
If they are being really slow or questioning details too much then make a big fuss. The one that shouts the loudest usually get the attention first.
The whole point of insurance is that it’s based on the principle of indemnity: that means you are placed in the same financial position after the event as you were in before, making neither a profit nor a loss. In practice of course due to the inconvenience, excesses on policies and contributions for betterment (where the company replaces now items for old ones), you usually make a loss, however small that is. There are exceptions to this on some claims, where there is an agreed value or “new for old” on certain items.
If you are not happy with the way your claim is progressing or the way you are being treated then you could request to see a copy of the company’s complaints procedure.
If, after following through with the company’s complaints procedure, exactly as stated, you are still not satisfied, you should ask for what is known in the industry as a “deadlock letter“. In other words the company is admitting that you have reached a statement and no further progress towards an agreement is going to be possible.
Before the Financial Ombudsman Service (FOS) will look at a complaint, you must have given the insurance company the chance to resolve the matter. Under the complaints-handling rules of the FOS, a company has a maximum of eight weeks to try and resolve a complaint unless, for special reasons, the FOS has given it a special waiver to extend the time limit.
This time limit applies no matter how many stages the company has in its own complaints-handling process. After eight weeks, you have the automatic right to bring the complaint to the FOS if you do not want to allow the insurance company any more time. You do not have to wait for a ‘deadlock letter’ from the company before doing this.
Under the Financial Services Authority (FSA) rules, a company must tell its customers of their right to take their complaint to the ombudsman. It must do this either when it sends its ‘final response’ (a formal letter setting out the outcome of the complaint) or eight weeks after it received the complaint, if it has not yet been able to send a ‘final response’ (and has therefore ‘run out of time’).