Virtually all organizations are exposed to some type of property risk. Storms, fires or other natural or human-caused disasters can bring manufacturing facilities, warehouses, or storefronts to a standstill. Business owners constantly wrestle with the question of how to effectively mitigate and recover from property damage and resume operations following such a loss event.
The good news is there are many proven strategies and techniques that businesses can use to address property risks. Preparation and planning are essential. What can be less obvious are the benefits a property loss adjuster can bring to both pre-event planning and the actual loss adjusting process following the event.
When to engage a loss adjuster
The ideal time to engage a property loss adjuster is in the risk management planning and preparation stage. Familiarity with an organization’s property exposures, insurance program and business priorities can make a huge difference following a storm or loss event when time is of the essence. While the property loss adjuster will investigate the loss, assess property damage, review the insurance policy, and oversee the claims process, being able to apply these technical skills with an understanding of the business organization’s priorities and insurance carriers’ framework is incredibly valuable.
How to plan accordingly
Pre-loss planning allows businesses time to be strategic, identify valued resources, and contemplate a range of scenarios. Insurance programs should be reviewed on a routine basis to ensure they address current property exposures or changing business needs. This should include a complete listing of all properties and appropriate valuations. As a valued team member, a property loss adjuster can help the organization interpret and understand insurance policies and how they would likely respond to various loss scenarios. This includes understanding the application of any insurance deductibles or co-insurance clauses as well as how other terms and conditions would apply.
A property loss adjuster can also help a business owner identify valued service partners who can assist in the repair, recovery and restoration of a property or facility should a loss occur. This includes emergency contractors, engineers and consultants. They, too, can help businesses create an effective and realistic disaster recovery plan. Knowing the roles and responsibilities of the parties ahead of time increases confidence and provides greater insights into what can be a complex process.
After a loss
Following a storm or loss event, the property loss adjuster can help drive and steer the recovery and repair process among the respective players. A meeting with the business owner, insurance carriers, and claims team can be critical in setting the tone and expectations for moving forward. In this meeting, projected timeframes and milestones are put forward as the business owner and insurance carriers begin to discuss priorities and convey expectations as to what happens next.
The property loss adjuster typically oversees and completes the onsite inspection and investigation process. This will help determine the need to retain specialty consultants or other experts such as construction specialists, equipment experts, engineers, salvage consultants or accountants.
The property loss adjuster will sometimes invite both the business owner and the insurers to visit and inspect the damaged property together. This type of joint meeting can facilitate increased collaboration and agreement as to needs and resources. In addition, the adjuster’s recap of the visit will help reiterate findings, identify open items to be addressed, and list next steps in the process.
Property loss adjusters will frequently identify and organize various components of loss. By categorizing damage to the building, equipment, stock or contents, and business interruption and extra expenses, it becomes easier to isolate, communicate and focus on immediate recovery priorities. This information can be extremely helpful in looking at how the insurance policy’s terms and conditions will apply.
While loss estimates determine what initial claim reserves are made at the outset, reserving updates are provided as more information becomes available. Changes to reserves occur when additional damage is discovered, cost efficiencies are achieved, or material changes to the recovery or repair process are needed. Consistent and accurate reserving practices are essential for budgeting and planning purposes.
Mapping the process can also foster cooperation and interaction among the parties. This includes confirmation of agreements on known or covered damage, identification of scope or cost differences, and additional requests for information. Mapping can help minimize surprises or unexpected outcomes.
Property loss adjusters work hard to identify and outline an effective and efficient means to repair damage and restore property according to the terms and conditions of the insurance policy. Ideally, these efforts will result in a direct settlement that is perceived to be fair and acceptable to both parties of the contract – the business owner and the insurance carrier.
An alternative approach
Given the complexity of the loss and/or contract language, it is sometimes difficult to establish what is perceived to be a fair and equitable settlement. There can be disagreement around covered or non-covered damages, and damage disputes can derail negotiations. Ambiguity in loss assessment or policy interpretation can stall discussions.
When compromise is not possible, a property loss adjuster may turn to alternative approaches to conclude the loss, including appraisals, mediations, arbitration or litigation to bring the claim to resolution.
- Appraisals allow for an independent panel to establish the cost of damage and repairs.
- Mediation involves a trained mediator to help find a compromise and settlement as a way to resolve a legal dispute without going to the courtroom.
- Arbitration is when the policyholder and insurer agree to submit the dispute to an arbitrator who issues a binding decision.
- Litigation has to do with the policyholder and insurer employing legal representation to resolve the dispute before a courtroom judge and jury.
In certain situations, alternative dispute resolution measures can be helpful, but it is important to understand the circumstances surrounding each case and which can be employed most effectively in any give situation.
Widespread storms or loss events are challenging. They disrupt every facet of operations and the lives of people who are involved and support the business. At Sedgwick, we understand the demands and strains such events can pose and work hard to bring a caring and empathic outlook to these situations. This surfaces in our communications, interactions and resolute to do what is right. Sometimes our own colleagues are impacted by the same storm or damage events they are asked to survey and investigate. Their determination to find a solution to those impacted can be highly personal and their expertise and insights are highly impactful.
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Tags: Claims, Insurance, Loss, Loss adjusting, Property, recovery, repair, restoration, Restoring property, storms