Many commercial, property and consequential loss insurance policies cover Claim Preparation Costs. For example, the Mark IV Industrial Special Risks Policy reimburses the Insured for reasonable professional fees and expenses, not otherwise recoverable, for preparation of claims. The cost of time worked by an Insured on Claim Preparation during normal hours is not reimbursed as this is considered to be “recoverable” through the normal income earning activities of the business. Time & expenses charged by external consultants to prepare the claim for Material Damage and Consequential Loss is reimbursed provided the cost is considered to be reasonable and necessary.
Factors to keep in mind when choosing a Claims Preparer include: -
Independence – a Claim Preparer should be independent of any specific insurance broker or insurer. In 2007, Claim Solutions was requested to take over the preparation of a claim from a Claim Preparer employed by a major insurance broker. Unfortunately the client was underinsured and the Claims Preparer employed by the insurance broker was conflicted. Similarly it is a benefit it the Claim Preparer solely represents Insured's to avoid potential conflict of interest with an Insurer.
Expertise – the Claim Preparer should have appropriate expertise. It is inappropriate to engage a consutant experienced in liability claims to prepare a claim for a property loss. Similarly it may be inappropriate for an Insured to engage its external accountant to prepare a Consequential Loss claim if the accountant has not previously been involved in this field. Expertise needs to match the nature of the loss. An insured should question the consultant on the types of claims previously prepared.
Qualifications - While practical experience is paramount this is often supported by professional qualifications with the Australian and New Zealand Institute of Insurance and Finance, Chartered Institute of Loss Adjusters, Institute of Chartered Accountants and/or Certified Practising Accountants (CPA).
Dedication – An insured should question who will be preparing the claim. Will it be a specific individual or will the work be delegated to a range of people? The appointed Claim Preparer should be able to dedicate one staff member to be responsible for the claim. In our experience it is inappropriate to choose a Claim Preparer simply because a team of people are available. It is better to appoint one person with appropriate expertise who is dedicated to the claim. The cost can easliy escalate and become unreasonable when a team of people are involved.
Personality – Some claims, particularly those for Material Damage and Consequential Loss can continue for 12 months or more. An insured will be working closely with the Claim Preparer over this period. It is important to consider personality. An insured not only needs to build a working relationship with the Claim Preparer but the consultant should be able to build, or already have, established relationships with loss adjusters, insurers and brokers.
Conclusion – No-one wants to suffer a loss and submit an insurance claim. Should a loss occur it is important to take all reasonable steps to ensure it proceeds as smoothly as possible. Choosing an appropriate Claim Preparer is critical.
See also: - The Benefits of Appointing a Claim Preparer
Author
Published with permission of Claim Solutions Pty Ltd
Insurance Policy
Country: - Australia
Policy Description: - Industrial Special Risks Policy
Insurer: - Various
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