Steps to Take After Property Damage: Navigating the Insurance Claim Process

Property is one of the most valuable resources on a construction site. Inflation, supply chain issues, and skilled labor shortages have all had an influence on almost every aspect of operations, as everyone in the industry knows.

And the property issues that have long plagued contractors continue. Every year, an average of 3,840 structure fires are reported, and as of 2021, severe weather caused $150 billion in damages in the United States. Theft of tools and equipment is another ongoing concern.

Fortunately, one way contractors may protect their businesses from the unexpected is via insurance. Owners may keep their business—and project—moving forward by following these steps before and after filing an insurance claim. 

Before we go any further, keep in mind that these solutions are just for non-auto property conflicts. Each insurance policy will have its own stipulations outlining the contractor's duties in the event of loss or damage, which must be checked and followed.

REPORTING THE CLAIM

When a business has property loss or damage and desires to submit a claim under their policy, the claim must be filed as quickly as feasible. Some insurance policies may require claims to be reported by a specific date.

In some situations, failing to report a property loss promptly may result in the insurer refusing to provide coverage. Coverage may also be compromised if something prevents an insurer from inspecting the damaged property and determining the cause (or extent) of the loss.

Include the following information when reporting the loss to help speed up the reporting process and have the claim assigned to an adjuster with the necessary experience sooner:

• Name of the account and policy number;
• Date, time, and location of the theft or damage;
• Name and contact information for the individual reporting the loss, as well as a point of contact for the impacted facility;
• A thorough narrative of what occurred and the individuals involved; and
• If a crime is implicated, the number and jurisdiction of the filed police report.

If there is an immediate need to act on a property loss, such as a safety hazard or the possibility for more damage, notify an insurance agent and request that the claim be escalated. Otherwise, most insurers will attempt to contact a firm within 24 hours of assigning a claim to an adjuster.

EVIDENCE PRESERVATION AND LOSS MITIGATION

The majority of policyholders are obligated to minimize a loss. Contractors must weigh this against the requirement to retain evidence for coverage investigations—especially if a third party is recognized as being responsible for the loss.

On their initial phone contact, contractors and adjusters should discuss subjects such as mitigation and evidence preservation in order to determine next measures. In rare situations, an insurer may request that the damaged property be inspected by a field adjuster or another expert.

If an insurer determines that an inspection is unnecessary, the adjuster may request that the company photograph or visually document damages before cleaning up. Employees should ensure that the location is well-lit in order to record the exact facts of the loss.

SUBMITTING YOUR CLAIM

An insurer will most likely want to know the following information about theft losses.

• Who was the most recent person to view it?
• When did they notice it?
• What happened to it?
• When did the loss become known?
• Was there any proof of forced entry?
• How was the item kept safe?
• How did the list of missing objects come to be?

A theft affidavit or evidence of loss document, which includes a full inventory of any things lost or destroyed, may also be required of a firm. These forms normally ask for model numbers, brands, purchase dates, and the cost of replacement or original purchase price. 

Receipts or previous images of items might assist prove the loss, especially in situations of theft. If someone keeps a yearly list of tools and equipment acquired for tax purposes, it might give proof for the claim. The same is true for buy lists from commonly used merchants.

In other circumstances, an insurer may already have relationships with tool or equipment suppliers, allowing firms to replace their property swiftly and frequently at a lower cost.

DETERMINE A LOSS VALUE WITH THE HELP OF A CLAIMS ADJUSTER.

Contractors frequently recognize the worth of their property, whether it is a tool, equipment, or structure damage. An insurer will assess the loss and offer the firm with an itemized estimate or equipment quotation.

If a contractor disagrees with the value, he or she can provide their estimate to an adjuster along with additional information. Adjusters are frequently eager to work with firms to discover potential discrepancies and then devise a solution. Communication is essential throughout the claims process.

The more complicated the loss, the longer it may take to settle. An adjuster should thoroughly explain the settlement procedure. A covered business income loss involving interrupted activities, for example, is sometimes not fully assessed until operations restart again. 

As financial data are reported, such a setup may necessitate frequent loss computations and payouts. Before releasing payment for replacement cost benefits, plans with replacement cost provisions frequently need actual replacement to be accomplished (with accompanying invoices). Typically, the claim is paid in two stages, the first of which is a payment based on the actual monetary worth of the loss.

Even while most plans do not mandate it, insurers may frequently advance payouts in severe losses where coverage is evident and a firm need assistance. This is contingent on the advance being reconciled and subtracted from the ultimate claim amount.

CATEGORIES OF COVERAGE

Property damage will always be a danger in the construction business, but owners and managers may avoid it by checking their insurance coverage. Before the next occurrence, it's critical to understand the many forms of coverage available.

• Builder's risk or installation insurance protects a company's building projects from property damage. In addition to direct property damage, this coverage includes protection for soft expenditures such as engineer and architect fees, delays, and fines.
  
  
• Contractor's Equipment and Tools coverage protects equipment and its regular exposure when it is not in use at a contractor's place of business.
  
  
• Property insurance protects the buildings that a contractor owns and operates from, as well as the business personal property that is normally maintained there.
  


• When property damage either partially or totally closes down a business's place of operation, Business Income and Extra Expense insurance might aid. firm income compensates for missed revenues, whereas extra expenditure coverage pays for required expenses that shorten the time a firm is closed. This includes the expense of renting and establishing a temporary premises.

No contractor likes to consider the worst-case situations that might harm their company. However, with a few simple procedures and the assistance of a claims staff, contractors may return to full vigor sooner rather than later. 

The ideas in this article give a broad framework for filing claims, but each business owner should consult with a local expert or insurer to address any issues or requirements that are relevant to their operation.